Potential Home Sellers More Optimistic in Latest Fannie Survey
Written By: Joel Palmer, Op-Ed Writer
Consumers are increasingly optimistic about buying and selling homes as mortgage processors and underwriters prepare for the busy spring and summer real estate season.
Fannie Mae’s monthly Home Purchase Sentiment Index (HPSI) jumped more than five points to 81.7 in March, largely on the increased sentiment of potential buyers and sellers.
Compared with March 2020, the HPSI is up less than a point.
“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, Fannie Mae senior vice president and chief economist.
The percentage of survey respondents who believe now is a good time to sell a home increased from 55 percent to 61 percent in March. Furthermore, only 28 percent said it’s a bad time to sell, compared with 35 percent the previous 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.”
The percentage of respondents who say it is a good time to buy a home increased from 48 percent to 53 percent. Forty percent responded that it’s a bad time to buy, down from 43 percent the previous month.
“While the net ‘good time to buy’ component increased month over month, it has not recovered to pre-pandemic levels, as the homebuying experience continues to prove difficult for many of the same reasons, namely high prices and a lack of supply,” said Duncan.
Results for the other four components of the HPSI include:
Half of respondents expect home prices to increase in the next year, 14 percent expect declining home prices and 29 percent don’t anticipate any change in home prices.
Only 6 percent of respondents thought mortgage rates would fall in the next 12 months. About 54 percent said they expect rates to increase, while 34 percent said they will stay the same.
About 82 percent said they were not concerned about losing their job in the next year.
A fourth of respondents said their household income is significantly higher than 12 months ago, compared with 17 percent the month before. About 15 percent said their household income was lower, while 56 percent said it was the same.
Fannie also released results of its latest housing survey, which revealed that even during the pandemic, the majority of consumers believe real estate is a safe investment opportunity.
In the survey, consumers were asked about investing in stocks, bonds, homes and savings accounts. About 75 percent said homes are a “safe” investment, which ranked just below savings/money market accounts. Also, 73 percent felt that investing in a home has “a lot of potential,” compared with 63 percent who said the same about investing in stocks. Plus, 85 percent believe homeownership leads to wealth-building and better financial health.
Fannie noted that this data has been consistent for the past 10 years.
“Americans appear to have an ingrained belief that housing investments are almost as safe as a money market or savings account, but also that they have the growth potential of a stock investment,” Fannie’s researchers wrote.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
