Americans continue to gain confidence in the housing market, not just despite, but even because of rising home prices, according to the latest Home Purchase Sentiment Index from Fannie Mae.
Over the past year, home prices have continued to rise, threatening affordability, and housing inventory is falling dangerously low. However, despite these setbacks, Americans continue to hold a positive view of the housing economy.
Fannie Mae’s HPSI rose 3.7 points in January to 89.5, reversing the decrease seen the month before and an all-time survey high. This rise is due to increases in five of the six HPSI components.
The share of those who said now is a good time to buy a home increased three percentage points to 27% in January, reversing some of last month’s decline. The share of those who say now is a good time to sell a home also increased, rising four percentage points to 38%.
“Over the past year, continued home price growth has helped spur a sizable increase in the net share of consumers who say it’s a good time to sell a home but also a modest weakening in the net share who say it is a good time to buy,” said Doug Duncan, Fannie Mae senior vice president and chief economist.
Americans are increasingly expecting home prices to rise as those who said they expect home prices to go up over the next 12 months increased eight percentage points in January to 52%, a new survey high. But even as they expect home prices to rise, the share of Americans who say mortgage rates will fall in the next 12 months increased two percentage points to -50%.
When it comes to personal finances, the share of Americans who say they are not concerned about losing their job increased five percentage points to 73% and the share who say their household income is significantly higher than it was 12 months ago remained flat at 16%.
“HPSI rebounded from last month’s dip to a new survey high in January, in large part due to the spike in consumers’ net expectations that home prices will increase over the next year,” Duncan said. “Results may continue to fluctuate over the coming months as consumers sort out the implications of the newly passed tax legislation on their household finances.”
“At the start of 2018, it is still too early to determine the overall effect of the new tax legislation on housing, and we will need to see whether positive impacts on both housing demand and supply materialize in the coming months,” he said.