Fannie Mae’s Home Purchase Sentiment Index Increases Slightly in June

On Friday (7-7-23), Fannie Mae released its Home Purchase Sentiment Index® for June. According to the report, the HPSI increased by 0.4 points to a reading of 66.0 in June, as challenging supply and affordability conditions continue to weigh on the housing market.

In June, most of the HPSI’s six components were little changed month-over-month. However, survey respondents did report that home buying conditions improved slightly in June compared to May. Nonetheless, a significant majority of consumers continue to report that it is a “bad time to buy” a home, as they have since mid-2021. Year-over-year, the full HPSI index is up 1.2 points.

In remarks prepared to accompany the June HPSI report, Fannie Mae’s Senior Vice President and Chief Economist Doug Duncan said:

“Confidence in the housing market appears to have plateaued at a relatively low level, suggesting that many consumers may be coming to terms with elevated mortgage rates and high home prices. Home prices continue to be supported by the tight supply of homes available for sale, and, compared to the end of last year, fewer respondents today believe home prices will decrease over the next 12 months. Additionally, consumers’ mortgage rate expectations have tempered: A larger share of respondents think mortgage rates will stay the same over the next year, whereas mid-to-late last year, most thought rates would continue going up. This seems to signal that consumers are adapting to the idea that higher mortgage rates will likely stick around for the foreseeable future. We continue to forecast home sales to slow in the second half of the year, compared to the first half, due to ongoing affordability constraints and lack of housing supply.”