Housing attitudes rebound in November

Americans had more optimistic perceptions of the housing market in November as they were increasingly likely to have favorable views of buying conditions and the national economy, according to the latest National Housing Survey from Fannie Mae.

The Home Purchase Sentiment Index stood at 91.5 for the month, up 2.7 points from October and 5.3 points from November 2018. The index is based on six components of the monthly survey, including whether respondents think it is a good time to buy or sell a home, expected changes to home prices and mortgage rates, changes in household income, and unemployment concerns.

Sixty-one percent of respondents said they think it is a good time to buy a home, up 4 percentage points from both the previous month and previous year. Twenty-nine percent said they thought it was a bad time to buy, down 7 percentage points from October and 5 percentage points from November 2018.

Respondents were considerably less likely than a year ago to expect mortgage rates to increase over the next 12 months. Thirty-nine percent held this view, up 2 percentage points from the previous year but a year-over-year drop of 21 percentage points. However, just 11 percent said they believe rates will go down – up 7 percentage points from November 2018, but down 1 percentage point from October.

"While low rates have helped boost housing affordability compared to last year, the HPSI has increased only moderately in that timeframe," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "This may be due in part to the ongoing challenge of tight housing supply, especially in the starter home market. That lean supply means the recent mortgage rate decline—holding payment size constant—allows borrowers to increase bid prices for homes. As a result, home prices are propelled higher, mitigating the benefit of lower borrowing costs for many borrowers. Additionally, a rising savings rate suggests that consumers could be growing more financially conservative. Looking ahead, we continue to expect a steady but modest pace of growth in home purchase activity."

Respondents remained optimistic about their ability to qualify for a mortgage, with 59 percent saying they thought it would be easy to do so – up 2 percentage points from both the previous month and previous year. Thirty-nine percent said they thought it would be difficult to get a mortgage, down 1 percentage point from both the previous month and previous year.

Sixty-seven percent said they would buy a home rather than rent if they were to move, unchanged from October but down from 68 percent in November 2018. Twenty-eight percent said they would rent their next home, unchanged from the previous year but down 1 percentage point from the previous month.

Sixty percent said they think home rental prices will increase in the next 12 months, up 3 percentage points from October but unchanged from November 2018. Just 2 percent said they think rental prices will go down, a drop of 2 percentage points from both the previous month and previous year.

Sixty-six percent thought it was a good time to sell, down 1 percentage point from the previous month but up 3 percentage points from the previous year. Twenty-six percent thought it was a bad time to sell, down 2 percentage points from November 2018 but unchanged from the previous month.

Forty-four percent thought home prices will go up in the next 12 months, up 3 percentage points from October but down 2 percentage points from November 2018. Ten percent said they expect home prices to decrease, down 4 percentage points from the previous month and 3 percentage points from the previous year. On average, homeowners said they think home prices will grow by 2.8 percent in the next 12 months – up from 1.8 percent in October and 2.5 percent in November 2018.

Most respondents were not concerned about losing their job in the next 12 months, with 86 percent saying they were not worried about this potentiality and 14 percent saying they were concerned. This was unchanged from October but slightly more pessimistic than in November 2018, when 88 percent were unconcerned about losing their job and 11 percent were concerned.

While most respondents said their household income was about the same as it was 12 months ago, 28 percent said it is significantly higher – unchanged from the previous month and down from 32 percent in November 2018. Ten percent said their household income has gone down considerably, down 2 percentage points from the previous month but up 2 percentage points from the previous year.

Fifty-one percent said they expect their personal financial situation to get better over the next 12 months, down 2 percentage points from October but unchanged from November 2018. For the third month in a row, 9 percent said they believe their personal financial situation will worsen – a year-over-year drop of 1 percentage point.

Economic perceptions have been improving steadily in recent months. Fifty-seven percent said they think the U.S. economy is on the right track, up from 54 percent in October and 51 percent in September; this was also a year-over-year improvement of 4 percentage points. Thirty-three percent said they think the economy is on the wrong track, down from 38 percent in October and 40 percent in September; the share was also down 4 percentage points from the previous year.

Fannie Mae's National Housing Survey is based on telephone interviews with approximately 1,000 American adults each month. Respondents are asked more than 100 questions to gauge their perceptions of the housing market and economy.

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