Fannie Mae’s Home Purchase Sentiment Index, a composite index designed to track consumers’ housing-related attitudes, intentions and perceptions, increased nine points in June to 76.5. Although the HPSI is down 15 points year-over-year, June’s gain marked the second rise in HPSI since April’s almost record low.
According to the report, 61% of Americans now believe it is a good time to buy a home – an increase of 9 percentage points from May’s 52%. The share of respondents who say it is a good time to sell also increased to 41% from 32% the month prior.
“The share of renters who say it’s a good time to buy a home is now at its highest level in five years, suggesting favorable conditions for first-time home buying, consistent with the recent rebound in home purchase activity,” said Doug Duncan, senior vice president and chief economist of Fannie Mae.
Despite predictions by CoreLogic that home prices will decline 6.6% by May 2021, the number of HPSI respondents who say home prices will go up in the next 12 months increased in June from 26% to 34%, whereas the percentage who said home prices will go down decreased from 35% to 25%.
HPSI respondents who say mortgage rates will go down in the next 12 months decreased in June from 25% to 17%, while the number who expect mortgage rates to go up increased from 25% to 32%. Last week, Freddie Mac reported the average rate for a 30-year fixed mortgage was 3.07% – the lowest in the series history.
While initial jobless claims sat at 1.43 million at the end of June according to the Labor Department, the percentage of respondents who say they are not concerned about losing their job in the next 12 months fell from 75% to 74%. Those who are concerned increased from 24% to 26%.
“Survey respondents’ persistent, substantially elevated concerns about job security in the face of record unemployment remains a key takeaway, particularly among renters and homeowners with a mortgage,” Duncan said. “We believe the continuing uncertainty regarding the coronavirus’ containment suggests an uneven and potentially volatile course toward economic recovery.”
In April of 2020, the HPSI sat at 63 points, the survey’s lowest record since November of 2011. However, June’s 76.5 point sentiment continued to climb towards March’s 80.8 points, which occurred at the beginning of COVID-19.
Depending on the extent to which it can be attributed to consumers having chosen to delay or to accelerate home-buying plans due to the pandemic, Duncan predicts this activity may cool again in the coming months.