Fannie Mae’s latest Home Purchase Sentiment Index (HPSI) report revealed that, while consumer confidence in housing saw a slight monthly retreat in February, it remained very strong.
Last month’s reading of the index fell 0.5 points to 92.5, still very close to the all-time high of 93.8. Year over year, the HPSI is up 8.2 points.
“The HPSI remained relatively steady in February, reflecting another month of robust consumer sentiment consistent with strong housing market data to start the year,” said Doug Duncan, senior vice president and chief economist for Fannie Mae. “In particular, household income sentiment picked back up as more workers saw their wages rise amid tight labor market conditions, helping bolster already strong housing demand.”
The HPSI is derived via a live telephone poll of approximately 1,000 Americans who are asked six questions. Those six questions, which gauge consumers’ assessments of housing market conditions, make up the HPSI’s six components.
Three of those components decreased month over month in February, accounting for the monthly drop in the index. The net share of Americans who said it’s a good time to buy a home fell by 2 percentage points, as the percentage who said it’s a good time stayed flat at 59% while those who said it’s a bad time increased from 30% to 32%. The net share of survey participants expecting home prices to go up also decreased, falling 2 percentage points, while the net share of respondents who believe mortgage rates will go down in the next 12 months dropped 4 percentage points.
Meanwhile, Americans still believe it’s a good time to sell a home. The percentage of survey respondents who indicated such grew from 66% to 67%, while the share who said it’s a bad time increased from 21% to 22%, resulting in no change in the net percentage.
Americans also remain confident about the labor market, according to Fannie’s survey. The net percentage of Americans who said they aren’t concerned about losing their job remained unchanged, and the net share of those who said their household income is “significantly higher” than it was 12 months ago is up 5 percentage points.
Duncan did temper the survey’s results by saying that future sentiment surveys could be colored by the impact of the ongoing global COVID-19 outbreak.
“Though American consumers’ optimism about the direction of the economy is higher this month than at any point in the survey’s nearly 10-year history, the late February stock market decline, precipitated in part by evolving expectations of the potential economic impact of the coronavirus, is not fully reflected in this month’s results due to the timing of our survey data collection, which ended Feb. 22,” Duncan said. “We may see some volatility in sentiment in the months ahead as these circumstances play out.”