Attitudes rise and fall, but Fannie Mae’s April index saw a rise in all six sub-components. Overall, however, attitudes still fall into pessimism territory.
WASHINGTON – Fannie Mae’s Home Purchase Sentiment Index (HPSI) in April increased to its highest level since May 2022, jumping 5.5 points to 66.8.
All six components that make up the full HPSI increased month-over-month, most notably the component associated with consumers’ expectations for mortgage rates. While the component remains negative on net – meaning more than half of all respondents expect mortgage rates to go up over the next year – more than one in five (22%) expect mortgage rates to go down compared to only 12% the month before.
Still, affordability constraints continue to hinder overall homebuying sentiment. Only 23% of respondents think it’s a good time to buy a home, and a plurality again believe that home prices will increase over the next 12 months.
Year-over-year, the full index is down 1.7 points.
“This month’s increase in the HPSI was the largest in over two years, primarily driven by consumers’ more optimistic mortgage rate expectations,” says Doug Duncan, Fannie Mae senior vice president and chief economist. “An increased number of respondents indicated they think mortgage rates will go down over the next year, a belief that could be due to a combination of factors, including an awareness of decelerating inflation, market suggestions that monetary conditions will ease in the not-too-distant future, and, of course, actual mortgage rate declines during the month.”
Duncan also issued a note of caution, though – that a bump in optimism may be temporary as consumers continue to report uncertainty about the direction of home prices.
“We know that high home prices remain the primary reason given by consumers who think it’s a bad time to buy a home,” he says. “Until affordability improves for a larger swath of the homebuying public, we believe home sales will remain subdued compared to previous years.”
© 2023 Florida Realtors®
©Florida Realtors®
Source link
