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Housing market confidence drops again

Falls to lowest level since May 2020

For the second consecutive month, Fannie Mae’s Home Purchase Sentiment Index, a composite index designed to track the housing market and consumer confidence to sell or buy a home, dropped six points in December to 74. Year-over-year, the HPSI is down 17.7 points.

Both the “good time to sell” and “good time to buy” components fell significantly as respondents overwhelmingly noted unfavorability of economic conditions, according to Fannie Mae Senior Vice President and Chief Economist Doug Duncan. In turn, housing market confidence fell to its lowest level since May 2020.

“In particular, the sell-side component fell for the first time since April and by 18 points, reversing most of the increases of the past three months and implying to us that, at least temporarily, potential home sellers might wait to list their homes,” Duncan said. “If so, this could have the effect of perpetuating already tight inventory levels and supporting additional (albeit lesser) home price growth, which could contribute to a further moderating of home sales.”

The percentage of HPSI respondents who said it was a good time to buy a home fell again from 57% to 52% and those who said it was a good time to sell a home decreased from 59% to 50%. Those who expect home prices to increase remained the same at 41%, however the percentage of those who say home prices will go down increased from 13% to 16%. As a result, the net share of Americans who say home prices will go up decreased three percentage points month-over-month.

According to CoreLogic‘s Home Price Index, home prices increased 8.2% in November, compared to the year prior, marking the largest annual appreciation since March 2014. The report also predicts home price growth to slow through this November.


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Looking at mortgage rates, the percentage who responded they expect rates to go down remained the same at 8%.

These few respondents weren’t wrong – on Thursday, the average U.S. mortgage rate for a 30-year fixed loan fell two basis points this week to 2.65%, the lowest rate in Freddie Mac’s Primary Mortgage Market Survey’s near 50-year history.

Unemployment concerns fell in December from 76% to 75% after increasing in November. According to the Bureau of Labor and Statistics, jobless claims in November were higher in 386 of 389 metro areas, leaving the national unemployment rate at 6.4%, not seasonally adjusted, up from 3.3% a year earlier.

Notably, late last month, a second stimulus package was passed which includes $300 a week of extra unemployment benefits.

The percentage of respondents who said their household income is significantly higher decreased from 24% to 20%, while the percentage of those who say their income is lower remained unchanged at 18%.

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