Buyer confidence improves in Fannie Mae's housing survey for April

Following a more pessimistic response in March, opinions on whether it was a good time to buy a home showed some recovery in April's National Housing Survey from Fannie Mae. A record share of respondents also said they thought it would be easy for them to get a mortgage.

Fannie Mae's Home Purchase Sentiment Index rose 2.2 percentage points in April to 86.7, rallying from a drop of 3.8 points to 84.5 in March. This index is based on six factors in the survey, including whether respondents think it's a good time to buy or sell a home, expected changes to home prices and mortgage rates, job security, and recent changes in household income.

"The Home Purchase Sentiment Index returned to its longer-term trend line after reclaiming ground lost last month. This is aligned with our market forecast of about 3 percent sales growth in 2017," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Historically strong inflation-adjusted house price gains are tempering consumer sentiment, whereas consumer optimism regarding the ease of getting a mortgage reached a survey high. On balance, housing continues on a gradual growth track."

Fifty-seven percent of respondents said they thought it would be easy to get a mortgage, up 3 percentage points from March and 4 percentage points from April 2016. Thirty-nine percent said they thought it would be difficult to get a mortgage, down 4 percentage points from the previous month and 5 percentage points from the previous year.

Sixty-two percent considered it a good time to buy a home, up 2 percentage points from March and 1 percentage point from April 2016. The share of respondents considering it a bad time to purchase a home fell 4 percentage points from the previous year and 3 percentage points from the previous month to stand at 30 percent.

This slight improvement in optimism came despite continued expectations that mortgage rates will rise in the next 12 months. Sixty-two percent said they expect rates to go up, an increase of 12 percentage points from the previous year but down 2 percentage points from the previous month. Five percent said they think rates will fall, up 1 percentage point from both the previous month and previous year.

Respondents were somewhat warier of selling conditions, although a majority—57 percent—considered it a good time to sell. This share was down 3 percentage points from March, but up 5 percentage points from April 2016. Thirty-one percent considered it a bad time to sell, down 6 percentage points from the previous year but up 2 percentage points from the previous month.

Fifty-three percent said they expect home prices to go up in the next 12 months, up 2 percentage points from the previous month and 7 percentage points from the previous year. Eight percent said they think prices will go down, up 1 percentage point from March but down 1 percentage point from April 2016.

Respondents expected home prices to increase by an average of 3 percent over the next 12 months. This share was up from 2 percent in April 2016, but unchanged from March. The average expected increase in home rental prices was 4 percent, down from 4.1 percent in March but up from 3.5 percent in April 2016.

Fifty-two percent said they believe home rental prices will increase in the next 12 months, down 5 percentage points from the previous month and 4 percentage points from the previous year. For the third straight month, only 3 percent of respondents said they think rents will decrease.

Sixty-seven percent of respondents said they would buy their next home if they were to move, up 2 percentage points from March and 4 percentage points from April 2016. The share indicating that they would rent their next home fell from 32 percent in the previous year and 30 percent in the previous month to 28 percent.

Respondents showed more confidence in their job security, with 88 percent saying they are not concerned about losing their job in the next year. This share was up 3 percentage points from the previous month and 1 percentage point from the previous year. Eleven percent said they were worried about a job loss, down 4 percentage points from March and 2 percentage points from April 2016.

Twenty-five percent said their household income is significantly higher than it was 12 months ago, up 2 percentage points from March and 1 percentage point from April 2016. Twelve percent said their income is significantly lower, unchanged from the previous month and down 1 percentage point from the previous year.

The share of respondents expecting their personal financial situation to get better in the next year has declined steadily in recent months, falling from 52 percent in February to 47 percent in April. However, this share was still a year-over-year increase of 3 percentage points. Ten percent said they believe their financial situation will worsen, the same share as the previous month's survey and down 3 percentage points from April 2016.

Opinions on the U.S. economy were relatively unchanged from March. Forty-six percent said they thought the economy is on the right track, down 1 percentage point from the previous year but 8 percentage points higher than in April 2016. Thirty-nine percent said they think the economy is on the wrong track, down 2 percentage points from the previous month and 13 percentage points from the previous year.

Fannie Mae's National Housing Survey polls 1,000 Americans via phone interview each month, asking more than 100 questions to gauge opinions on the housing market and economy. The survey began in June 2010.

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