The Fannie Mae Home Purchase Sentiment Index® (HPSI) recorded a notable increase of 0.7 points in October 2024, bringing it to 74.6—its highest level since February 2022.
This boost comes alongside a 9.7-point increase year-over-year, signaling a significant recovery from the all-time low experienced just two years ago. Mark Palim, Fannie Mae Senior Vice President and Chief Economist, emphasized the broader trend, stating:
“While we have seen significant improvement in overall housing sentiment over the past two years, consumers’ perception of homebuying conditions remains strained, with only 20% believing it a ‘good time’ to buy a home, primarily due to high home prices.”
Key HPSI Highlights for October 2024
Good/Bad Time to Buy
Consumer sentiment regarding homebuying showed gradual improvement. The share of respondents who believe it’s a good time to buy rose to 20%, a 1-percentage point month-over-month increase. Meanwhile, the share of respondents who think it’s a bad time to buy fell slightly from 81% to 80%.
Good/Bad Time to Sell
While consumer sentiment toward buying improved, the share of respondents who believe it’s a good time to sell dipped by 1 percentage point to 64%. The share who think it’s a bad time to sell held steady at 35%, resulting in a net
Home Price Expectations
The outlook on home prices was stable, with 39% of respondents expecting prices to rise over the next 12 months, and 23% anticipating a decrease. The share anticipating prices to stay the same increased by 1 percentage point to 38%, nudging the net share of those expecting price increases up by 1 percentage point to 17%.
Mortgage Rate Expectations
Mortgage rate expectations showed an interesting pattern: the share of consumers who believe rates will go down over the next 12 months fell from 42% to 39%. However, the share expecting rates to rise decreased even more sharply, from 27% to 22%—a survey low.
“…the share citing mortgage rates as the primary driver of their homebuying pessimism declined again this month,” Palim pointed out, “however, since the fielding of the survey primarily in the first half of October, mortgage rates moved sharply higher, which may serve to suppress some of the recently observed rate optimism.”
Job Loss Concern and Household Income
Employment confidence continues to be a stabilizing factor for consumer sentiment. The percentage of employed respondents who are not concerned about job loss rose by 2 percentage points to 79%, while those expressing concern dropped to 20%.
In addition, household income metrics held steady in October, with:
- 18% of respondents reporting significantly higher income than 12 months ago
- 11% indicating lower income
- 70% saying their income remained the same
Despite stable employment and consistent income levels, high home prices continue to sideline many potential buyers. This has sparked a shift in consumer preferences. Palim explained:
“One effect of the prolonged period of relatively high home prices of the past four years is that we are seeing a slowly growing preference to rent rather than buy on consumers’ next move. With rent growth expected to remain modest in 2025, more consumers may be seeking – and finding – attractive deals in the rental market as they continue saving toward a future home purchase.”
The October 2024 increase in the HPSI is a clear indicator of growing consumer optimism, despite persistent challenges like high home prices and fluctuating mortgage rates. Understanding these nuanced shifts in sentiment is key to staying proactive and responsive to client needs.
Read Fannie Mae’s full research report for more information.
