The Fannie Mae Home Purchase Sentiment Index (HPSI) fell 1.5 points to 85 in August but continued its gradual climb upward from the same period last year. Four of the six HPSI components decreased during the month, most notably the share of consumers who expect home prices to go up in the next 12 months and the share who say now is a good time to sell a home – decreasing 6 percent and 5 percent in August, respectively.
Additionally, more consumers reported a positive employment outlook from the previous month, up 4 percent in August, and those reporting significantly higher household income fell 1 percent. Overall, consumer housing sentiment remains positive and bodes well for continued growth in housing activity.
“Consumers have a fairly optimistic 12-month outlook on housing at the end of the summer home-buying season, supported by increased job confidence and more favorable expectations regarding their personal financial situations compared with this time last year,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said in a press release. “The return to a slight upward trend in the HPSI during the spring and summer is, thus far, in line with our forecast, which calls for 4 percent growth in home sales in 2016 to the best level since 2006 and continued improvement for 2017.”
The HPSI was first released publicly in September 2015. The HPSI trended strongly upward from March 2011 until mid-2013. Home sales also strengthened sizably in 2012 and 2013.
As the HPSI dipped lower in response to the “Taper Tantrum” in mid-2013, home sales fell in 2014 for the first time in four years. The HPSI fully recovered by the fall of 2014 and since has been on its gradual upward trend, reaching a record high in July 2016 before pulling back slightly in August. Its recent trend signals that home sales likely will advance through next year.