Fannie Mae’s Home Purchase Sentiment Index® Increases in October Despite Higher Mortgage Rates

On Tuesday (11-7-23), Fannie Mae released its Home Purchase Sentiment Index® (HPSI) for October. The HPSI inched 0.4 points higher to a reading of 64.9.

Month-over-month, the six components that make up the HPSI were a mixed bag, with 3 posting declines, one unchanged, and two increasing. (In September, 5 out of the 6 components declined.)

In October, 15% of consumers reported that it is a good time to buy a home, while 85% said it was a bad time to buy a home. Additionally, 63% said it was a good time to sell a home, while 37% said it was a bad time to sell a home (both were unchanged from September). Only 16% of consumers indicated that they expect mortgage rates to decline over the next 12 months.

Overall, the full index is up 8.2 points year-over-year.

Adding additional background and his analysis to the report, Fannie Mae Senior Vice President and Chief Economist Doug Duncan said:

“Consumers expressed even greater pessimism toward the larger economy this month, in addition to their ongoing frustration with the housing market. Via our October National Housing Survey®, 78% of respondents told us the economy is on the ‘wrong track’—up from 71% last month—and they overwhelmingly cited inflation as the primary reason why. Across all income groups, inflation has consistently driven the ‘wrong track’ belief since the end of last year, suggesting consumers are fed up with the high prices of many goods and services. Although the labor market is strong and wages have risen in the past year, consumers may believe that their purchasing power has not kept up with prices, as 69% of consumers say their incomes are ‘about the same’ compared to the previous year. We expect this tightness in household finances, along with high home prices and elevated mortgage rates, to prolong the affordability challenges facing many would-be homebuyers.”