Fannie Mae’s Home Purchase Sentiment Index® Posts First Increase in Nine Months in November

Fannie Mae on Wednesday (12-7-22) released its Home Purchase Sentiment Index® (HPSI) for November. In November, the HPSI increased 0.6 points to a reading of 57.3—the first increase recorded in the past nine months. Nonetheless, the HPSI remains just above the all-time low that was established last month in October and well below its level a year ago. Year-over-year, the HPSI has declined 17.4 points.

According to the HPSI report, four of the index’s six components increased slightly month-over-month, including those associated with homebuying and home-selling conditions. However, both of those levels remain well below year-over-year levels, having declined a net 28 and 38 points, respectively.

Elevated mortgage rates continue to limit affordability, and 62% of respondents to the survey expect mortgage rates to rise even higher in 2023, compared to only 10% who expected rate to decline.

Adding additional background to the November HPSI and his expert analysis, Dr. Douglas G. Duncan, Fannie Mae’s Senior Vice-President and Chief Economist, said:

“Both consumer homebuying and home-selling sentiment are significantly lower than they were last year, which, in our view, is unsurprising considering mortgage rates have more than doubled and home prices remain elevated. Following eight months of consecutive declines, the HPSI did tick up slightly in November but is essentially unchanged since hitting its all-time low last month. Consumers continue to expect mortgage rates to rise but home prices to decline, a situation that we believe will contribute to a further slowing of home sales in the coming months, as both homebuyers and home-sellers have reason for apprehension. We expect mortgage demand to continue to be curtailed by affordability constraints, while homeowners with significantly lower-than-current mortgage rates may be discouraged from listing their property and potentially taking on a new, much higher mortgage rate.”