Fannie Mae Introduces New Home Purchase Sentiment Index

November 18, 2015

September brought big news from Fannie Mae with the published results of a new index that was launched in August. The six-question index condenses a wealth of information in regard to home buying in America. As part of the “Home Purchase Sentiment Index” or HPSI, the new segment combines the answers to six questions into one score. The questions were created to measure consumers’ attitudes about housing market conditions and report on factors that affect home buying trends and decisions.

According to a press release from Fannie Mae, the existing HPSI, “Reflects more than four years of data, and is designed to provide distinct signals about the direction of the housing market, in order to help industry participants make better informed business decisions.”

The plan is to use the index as a monthly evaluation and it will be released on either the seventh day of each month or the first business day following the 7th. The new six-question portion cuts right to the chase in evaluating the core factors that impact home purchases.

Billed as the “most detailed consumer attitudinal survey of its kind,” Fannie Mae’s National Housing Survey queries 1,000 Americans via telephone interviews each month. Between August 1st, 2015 and August 24th, 2015, homeowners and renters were asked more than 100 questions. The goal was to evaluate the following points:

  • Attitudes regarding either owning or renting a home
  • Their perception on home prices and rental prices
  • The state of homeowners in distressed situations
  • The state of the economy
  • Household finances
  • Overall consumer confidence

Here are the six specific questions that the new portion of the HPSI asks:

  • In general, do you think this is a very good time to buy a house, a somewhat good time, a somewhat bad time, or a very bad time to buy a house?
  • In general, do you think this is a very good time to sell a house, a somewhat good time, a somewhat bad time, or a very bad time to buy a house?
  • During the next 12 months, do you think home prices in general will go up, go down, or stay the same as where they are now?
  • During the next 12 months, do you think home mortgage interest rates will go up, go down, or stay the same as where they are now?
  • How concerned are you that you will lose your job in the next twelve months? Are you very concerned, somewhat concerned, not very concerned, or not at all concerned that you will lose your job in the next twelve months?
  • How does your current monthly household income compare to what it was twelve months ago?

The results from the August survey revealed that among the respondents, 63 percent feel that it is a good time to buy a house. In regard to whether now is a good time to sell, 47 percent agreed. Forty-seven percent of those polled indicated that they believe home prices will rise within the next 12 months. When asked their feelings as to whether or not mortgage interest rates will increase over the next 12 months, 54 percent said, “yes.”

A positive 83 percent of the respondents expressed confidence in their employment stability. And finally, only 24 percent of those in the survey noted that their household income had seen a significant increase within the last 12 months.

Fannie Mae’s chief economist, Doug Duncan, noted that, “Expectations of rising mortgage rates and increasing concerns in the last six months about the direction of the economy seems to be weighing on consumers’ assessment of the housing market.”

He added that among those surveyed who had positive feelings about buying and selling, many respondents felt that way due to continuing low interest rates and the belief that they will continue. On the flip side, there were those consumers who cited the state of the economy as to why now is not a good time to buy or sell a home. However, over and above the new six-question section, the historic data collected in the last four years from the existing HPSI indicates that consumers are optimistic about the state of the U.S. housing market.

To learn more about the creation of this new index, please use this link:

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