Fannie Mae released the Home Purchase Sentiment Index (HPSI) for December 2017, and it shows a reversal in what we have seen in recent months: a decrease of 2.0 points to 85.8. While this isn’t a reason to be alarmed, it is something to watch into the future.
Why the HPSI Decreased in December 2017
The HPSI decreased by 2.0 points in December 2017 because it was lower in a majority of the central questions that it monitors. There was also a decrease in four of the six HPSI components. Many of the respondents, who are mainly involved in the real estate industry or looking to buy a home, had negative responses to the questions.
In December, the number of people questioned who said they believed it is a good time to buy a home decreased by 5 percent when compared to November, and decreased 8 percent when compared to December 2016.
The share of those questions that responded that now is a good time to sell their home was up 21 percent from last year, but it remained flat over the latter part of the year.
Those who were questioned that said they believed home prices will go up in the next year decreased by 2 percent as well.
While we may not know the cause for fluctuations in the HPSI at a given time, respondents had a perception of less job security compared to last year.
The net share of people who were not concerned about being unemployed decreased by 6 percent. Similarly, those who said mortgage rates are likely to go down within the next year fell by 1 percent.
One bright spot is people who reported that their income was significantly higher than last year at this time rose by 2 percent.
“Consumers remained cautious in their housing outlook at the end of 2017, as tax reform discussions continued. In December, mirroring the other major consumer sentiment benchmarks, the HPSI reflected this caution and declined slightly,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Entering 2018, housing affordability remains a persistent challenge, particularly in rental markets, where consumer expectations for price increases over the next 12 months reached a new survey high.”
Note that the HPSI traditionally dips in winter months, when people tend to face more financial strain, there are fewer homes on the market, and home prices trend upwards.
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers and homeowners in all of Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients with HARP refinancing to lower their monthly mortgage payments.