Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose by 5.2 points in March, reaching a reading of 81.7.
It’s a big gain — the most the HPSI has increased since it vaulted 9 points last June after bottoming out during the early stages of the COVID-19 pandemic. With much of the country hopeful thanks to the broadening of vaccinations and more federal government support, people are viewing the housing market with renewed confidence after a slight sentiment dip last month.
“The significant increase in the HPSI in March reflects consumer optimism toward the housing market and larger economy as vaccinations continue to roll out, a third round of stimulus checks was distributed, and the spring homebuying season began — perhaps with even more intensity this year, since 2020’s spring homebuying season was limited by virus-related lockdowns,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
The HPSI is derived from survey answers to six questions, each of which are monitored in a component sub-index. During March, the seller sentiment sub-index saw the most traction, with the share of respondents who said it’s a good time to sell a home up from 55% to 61% and the percentage of those who believe it’s a bad time down from 35% to 28%. Those swings resulted in an increase in the net share of those who say it’s a good time to sell a home, up 13 percentage points month over month.
“Home-selling sentiment experienced positive momentum across most consumer segments – nearly reaching pre-pandemic levels and generally indicative of a strong seller’s market,” said Duncan. “Consumers once again cited high home prices and tight inventory as primary reasons why it’s a good time to sell.”
Alternatively, Duncan added, while the net “good time to buy” component increased month over month — growing 8 percentage points from February — it hasn’t yet rebounded to a pre-pandemic level. Per Duncan, “the homebuying experience continues to prove difficult for many of the same reasons, namely high prices and a lack of supply.”
Of the HPSI’s other components, the net share of respondents who believe home prices will increase grew 7 percentage points month over month, while the net share of those who report that their household income is “significantly higher” than it was 12 months ago is up 12 percentage points from February. The net share of respondents who say they are not concerned about losing their jobs remained unchanged from the month prior.
The only component which saw a decline in March was the one gauging mortgage rate expectations, with the net share of respondents who believe mortgage rates will go down over the next 12 months down 9 percentage points from February.