Americans are feeling better about their personal finances and the economy as a whole, but that doesn’t make them any more likely to say that now is a good time to buy a house, a new report from Fannie Mae showed.
According to Fannie Mae, its Home Purchase Sentiment Index increased in December by 2.4 points to 83.2, which closed the index’s “strongest year thus far.”
Fannie Mae’s report showed that Americans’ household income prospects returned back to levels of three months ago.
Fannie Mae said that the share of consumers who reported that their income was significantly higher than it was 12 months ago climbed nine percentage points on net in December, while those who were unconcerned about losing their job rose three percentage points on net.
“Coupled with an improved financial outlook, more consumers said they believe now is a good time to sell a home – climbing four percentage points on net – although the share who believe now is a good time to buy remained flat in December,” Fannie Mae said.
According to Fannie Mae, consumer sentiment about personal finances and the direction of the economy has improved since November. Four of the six HPSI components increased in December, including household income, whether now is good time to sell, job security and home prices.
On the other hand, consumers’ mortgage rate net expectations fell by four points, while the net share of respondents who said it is a good time to buy remained at 35%.
Overall, the HPSI is up 1.9 points since this time last year.
“Consumers ended the year on an improved note with regard to their income, job security, and overall economic outlook,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
“This more positive consumer sentiment brought the HPSI up a few points, moving the index up for all of 2015,” Duncan continued.
“Brightening economic prospects, if sustained, should stimulate demand for homeownership,” Duncan said. “However, continuing upward pressure on rental prices and constrained housing supply, particularly for starter homes, may mean prospective first-time homebuyers could face affordability constraints.”
According to Fannie Mae, the net share of respondents who say that it is a good time to buy a house remained flat at 35%.
Additionally, Fannie Mae’s report showed: