Americans Shift Views on the Housing Market

The housing market could be in store for some changes in the near future. One of the top survey’s which captures consumer sentiment on home purchases has fallen after breaking a few records back in February. The Federal National Mortgage Association, more commonly known as Fannie Mae maintains a long standing index compiled from answers to an NHS survey. The index, called the HPSI (Housing Purchase Sentiment Index) is intended to gauge consumer confidence in the housing markets and is comprised of six components. Five of those components fell in March, some dramatically.

The HPSI compiles information about consumers’ home purchase confidence from the NHS into a single number which reflects current views of housing market conditions. The NHS is conducted monthly by telephone among 1,000 consumers, both homeowners and renters. Respondents are asked more than 100 questions used to track attitude shifts, six of these answers are used to construct the HPSI. The March 2017 National Housing Survey was conducted between March 1, 2017 and March 26, 2017.

While this survey may not seem very important the contrast of the answers is very telling of a shift in the public’s view of the housing market. Overall the outlook for the housing market doesn’t look very good from a consumer perspective. For example, when asked if it was a good time to buy a home the number of respondents fell by 10 percent. In contrast, the number of respondents who thought it was a good time to sell actually rose by 9 points. Curiously, the lion’s share of those surveyed cited the rising and high price of homes as the single most important reason for it being both a bad time to buy and a good time to sell. In addition, those who felt it was a bad time to buy were also concerned about job security, a anxiety which rose 8 percent.

Though the following questions are related to the narrative they are not one part of the components which make up the HPSI. These questions show respondents are increasingly less confident that their income will improve in the next 12 months. When asked if they thought their income would be significantly higher in one year 8 percent fewer people believed their income would grow significantly. Even more telling, respondents who expected their financial situation to worsen went up 3 percent.

The picture here is getting clearer but there’s more. Those surveyed also showed a 5 percent decrease in those who believed that mortgage rates would go down and a 1 percent increase of those who think home prices will continue to rise. When asked about the economy being on the wrong or right track, answers reflected the same sentiment. Wrong track rose 6 percent while right track fell 1 percent.

All of this information may indicate a shift in making it harder to get loans for homes. Which makes rent to own homes an even more appealing way to become a homeowner.