Fannie Mae Home Purchase Sentiment Index Slips in February

On Friday, Fannie Mae released its Home Purchase Sentiment Index (HPSI) for February. Largely driven by increasing consumer pessimism that mortgage rates will go down in the next year, the HPSI declined 1.8 points to a reading of 71.6 in February. Year-over-year, the index was down 1.2 points, the first annual decline since 2023.

The share of consumers who say it is a “good time to buy” a home inched up last month to 24%, while the share who say it is a “good time to sell” dipped to 62%. February also saw a notable decline in consumers’ optimism toward their personal financial situation, including household income and concern they could lose their job.

In remarks accompanying the report, Fannie Mae Senior Vice President and Chief Economist Mark Palim said:

“In February, the HPSI saw its first year-over-year decline in nearly two years, which was mostly due to a shrinking share of consumers expressing optimism about the direction of mortgage rates. This growing pessimism makes sense, as mortgage rates had remained near the 7% threshold for a few months, including when we fielded this survey.

The decline in sentiment was further impacted by consumers’ growing concerns about their own personal financial situations. While some consumers may be slowly acclimating to the higher mortgage rate environment, the vast majority continue to believe it is a ‘bad time’ to buy a home—with high home prices cited as the primary sticking point. We continue to expect home sales activity to remain relatively light over our forecast horizon due to the ongoing lack of supply and overall unaffordability.”