After a slight falter in July, Fannie Mae’s Home Purchase Sentiment Index, a composite index designed to track consumers’ desire to sell or buy a home, is back up 3.3 points in August to 77.5.
Compared to this time last year, the HPSI is down 16.3 points, but has continued its upward recovery past April’s eight-and-half-year low.
After July’s HPSI survey, Fannie Mae confirmed it was a seller’s market after a 4% month-over-month gain. Now with the final summer month’s report coming to a close, seller morale progressed another 3% to 48% of respondents saying it was a good time to sell a home in August.
However, don’t count buyers out just yet. After an 8% drop In July, 53% of Americans believed it was a good time to buy a home. August saw another gain, ticking up to 59% of respondents echoing that same sentiment.
According to Doug Duncan, senior vice president and chief economist at Fannie Mae, continued near-record low mortgage rates drove the HPSI’s recovery.
While buyers and sellers are taking to the market with confidence, respondents were slightly more wary of whether home prices will go up or not in the next 12 months. According to the survey, those that believe prices will increase fell in August from 35% to 33%, whereas those who said home prices will go down increased from 23% to 26%. Respondents that believe home prices will stay the same was unchanged at 34%.
Last week, Freddie Mac reported the average rate for a 30-year fixed mortgage was 2.93%, 5 basis points higher than the same time a month ago when rates fell to an all-time low. However, respondents who said mortgage rates will make their way back down in the next 12 months increased in August from 16% to 17%.
Despite the volatile nature of the current economy, the U.S. unemployment rate fell to a five-month low of 8.4% in August, according to the Labor Department. Mike Fratantoni, chief economist of the Mortgage Bankers Association, estimated the drop could suggest the economy is healing more quickly than anticipated, and those surveyed agreed. The percentage of respondents who said they are not concerned about losing their job in the next 12 months increased from 76% to 78% and those who said their household income is significantly higher than it was 12 months ago also increased from 22% to 25%.
Duncan said it’s important to note that the August survey was conducted as consumers continued to face uncertainty regarding schools’ and businesses’ reopening plans as well as the CARES Act $600-per-week income supplement expiring.
This time last year, 50% of respondents thought the economy was on the right track – today 31% believe that same sentiment.