Fannie Mae’s Home Purchase Sentiment Index Falls Again in May

On Friday, Fannie Mae released the results of its latest Home Purchase Sentiment Index (HPSI). The May HSPI decreased 2.5 points to 69.4 as the component measuring consumer attitudes toward homebuying conditions fell markedly, reaching an all-time survey low.

In May, only 14% of consumers indicated that it’s a “good time to buy” a home, down from 20% in April, while the share believing it’s a “good time to sell” fell from 67% to 64%. Meanwhile, consumers continue to believe affordability will remain tight for the foreseeable future, as respondents believe that, on net, home prices and mortgage rates will go up over the next year.

Among the positives from the survey: A growing share of respondents, now 20%, indicated that their household income is significantly higher than it was a year ago. The full index is up 3.8 points year-over-year.

Adding background and analysis to the May HPSI, Fanie Mae Senior Vice President and Chief Economist Doug Duncan said:

“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market. While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability. This is most clearly evidenced by our ‘good time to buy’ component falling to a new survey low this month. On the other hand, homeowners’ perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months. This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future. As our latest forecast notes, we expect improvements to housing inventory will lead to slightly increased sales activity through the end of the year.”