American’s sentiment toward the housing market increased slightly in November, according to Fannie Mae’s Home Purchase Sentiment Index (HPSI). The index is part of Fannie Mae’s National Housing Survey Monthly Indicators report which assesses consumer sentiment toward owning and renting a home, the current state of their household finances, views on the U.S. housing finance system, and overall confidence in the economy.
The HPSI increased 0.6 points in November to 57.3, its first increase in nine months. The index remains just above its all-time low of 56.7 which was set in October, and significantly below its level at this time last year.
Four of the index’s six components increased modestly month-over-month, including those associated with homebuying and home-selling conditions; however, both remain well below levels from one year prior, having declined on net 28 and 38 points, respectively.
Higher mortgage rates continue to constrain affordability, and 62 percent of respondents expect mortgage rates to rise even further over the next year, compared with only 10 percent who expect rates to decline. Year-over-year, the full index is down 17.4 points.
“Both consumer homebuying and home-selling sentiment are significantly lower than they were last year, which, in our view, is unsurprising considering mortgage rates have more than doubled and home prices remain elevated,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said in the accompanying press release. “Following eight months of consecutive declines, the HPSI did tick up slightly in November but is essentially unchanged since hitting its all-time low last month. Consumers continue to expect mortgage rates to rise but home prices to decline, a situation that we believe will contribute to a further slowing of home sales in the coming months, as both homebuyers and home-sellers have reason for apprehension. We expect mortgage demand to continue to be curtailed by affordability constraints, while homeowners with significantly lower-than-current mortgage rates may be discouraged from listing their property and potentially taking on a new, much higher mortgage rate.”