BAM Key Details:
- Housing sentiment, as measured by the Fannie Mae Home Purchase Sentiment Index, dropped 3.6 points to 58.0 in February, breaking its three-month streak of increases and pulling the index closer to its all-time low set in October 2022.
- Four of the six HPSI components declined month over month, specifically those having to do with job security and whether it’s a good time to sell
In February, the Fannie Mae Home Purchase Sentiment Index dropped 3.6 points to 58.0, officially breaking the three-month streak of improvements in housing sentiment and bringing the index closer to its all time low set in October 2022.
Four of the six HPSI components fell month-over-month—specifically those associated with job security and home-selling conditions. While both of those components remain at a net positive, 44% of survey respondents reported in February that it’s a bad time to sell a home—up from 39% the previous month—and 24% indicated concern over losing their job in the next 12 months, up from the previous month’s 18%.
Year-over-year, the full index for housing sentiment has dropped 17.3 points.
The decline was partly driven by a substantial decrease in consumers’ sense of home-selling conditions, with most respondents who indicated it’s a ‘bad time to sell’ citing unfavorable economic conditions and mortgage rates as the primary reasons for that belief. With home-selling sentiment now lower than it was pre-pandemic—and home-buying sentiment remaining near its all-time low—consumers on both sides of the transaction appear to be feeling cautious about the housing market. We believe these results corroborate our expectation for subdued home sales in the coming quarters, particularly now that mortgage rates have begun rising again. Additionally, this month’s survey indicated an increase in job security concerns, which we’ll continue to monitor closely, since labor market uncertainty could play yet another factor in slowing housing activity.
Changes in the HPSI components
Four of the six components in the HPSI dropped in February, with those associated with job security, household income, and home selling conditions remaining at a net positive:
- The net share of respondents saying it’s a good time to sell dropped by 10% month over month to 10%.
- The net share of those saying mortgage rates will drop fell 1% month over month to -40%.
- The net share of those saying they’re not concerned about losing their jobs in the next 12 months declined by 15% month over month to 50%.
- The net share of those saying their household income is significantly higher than it was a year ago decreased by 1% month over month to 11%.
Meanwhile, two components increased while remaining at a net negative:
- The net share of respondents saying it’s a good time to buy rose by 5% month over month to -59%.
- The net share of those saying home prices will increase went up by 1% month over month to -4%.
The Fannie Mae National Housing Survey (NHS) tracks and measures changes in consumer sentiment, based on their experience and concerns regarding the U.S. housing market and overall economy.
Other National Housing Survey indicators
Consumer answers to other National Housing Survey questions are worth including here since they provide a fuller picture of consumer sentiment and highlight their biggest concerns.
As a real estate professional, you’re uniquely positioned to address those concerns, using relevant data and information to paint a more accurate picture of real market conditions.
For example, knowing what the average buyer thinks about rental price trends vs. home price trends in their market can reveal misconceptions you can counter with fresh and accurate data regarding both—always keeping the best interests of your (prospective) client in mind.
Here’s what consumers are thinking about today’s housing market:
- On average, survey respondents believe rental prices will increase 7.6% over the next 12 months—a 0.8% uptick from last month. They also expect home prices to fall 0.5% on average over the next 12 months.
- The share of respondents saying home rental prices will increase went up 1% month over month to 66%, while the share saying rental prices will drop remained unchanged (month over month) at 10%.
- The share of respondents saying they would buy a home if they were moving dropped by 2% month over month to 69%, while the share saying they would rent increased by 2% month over month to 30%.
- The share of those who believe getting a mortgage would be easy rose 6% from the previous month to 48%, while the share who believe it would be difficult dropped 6% month over month to 51%.
- The share expecting their personal financial situation to improve dropped by 2% month over month to 31%, a new low for the survey, while the share expecting it to get worse increased by 2% month over month to 48%, a new high for the survey.
- Finally, the share of respondents saying the economy is on the wrong track fell by 2% month over month to 71%, while the share saying the economy is on the right track rose 2% from the previous month to 28%.
Top takeaways for real estate agents
Use the data from the HPSI results to start conversations with your clients and community about what’s really going on in the national housing market—as well as in your local market—to help consumers better understand what they’re facing, so they can make informed decisions.
Always be truthful in these conversations, making it clear that helping each client make the best decision for them is more important than making a sale. Put yourself in their place and explain the situation as it truly is. Those who are still determined to transact will appreciate your honesty as well as your in-depth understanding of the market.
From there, it’s just a matter of delivering the kind of value that sets you apart (in a good way) from the competition.