Fannie Mae Home Purchase Sentiment Index Increases for Third Consecutive Month in February

On Thursday, Fannie Mae reported that its Home Purchasing Sentiment Index® (HPSI) increased 2.1 points in February to a reading of 72.8. This marks the third consecutive monthly increase, due primarily to growing optimism around home-selling conditions. Year-over-year, the full HPSI is up 14.8 points.

In February, 65% of consumers said it is a “good time to sell” a home, up from 60% in January. The share of those who believe it’s a “good time to buy” a home increased modestly in February but remains extremely pessimistic at 19%.

In addition, Fannie Mae notes that a majority of consumers continue to believe that mortgage rates will decline over the next 12 months, although on net that component declined slightly this month.

In remarks and analysis prepared to accompany the results of the February HPSI, Fannie Mae Senior Vice President and Chief Economist Doug Duncan said:

“The HPSI increased for the third straight month, continuing its slow but steady rise from the low-level plateau observed through much of 2023; and consumer sentiment toward housing now rests firmly above where it was this time last year. Consumer attitudes toward home-selling conditions increased markedly in February, with current homeowners, in particular, expressing greater optimism that it’s a ‘good time to sell,’ a development that may foreshadow an upcoming increase in existing home listings. Additionally, despite the recent uptick in rates, consumers remain relatively optimistic that mortgage rates will decrease over the next 12 months. If their expectations come true and rates move closer to the 6% mark by the end of 2024, as we currently expect, then it’s likely that consumer sentiment on both sides of the transaction will improve, perhaps leading to a further thawing of the housing market. A decline in mortgage rates—and the resulting uptick in sentiment—would obviously bode well for the upcoming spring homebuying season, although affordability will likely remain a significant challenge for buyers, at least until there’s a meaningful addition to net supply.”