Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased 4.5 points in May to 67.5, after nearing its all-time survey low in April.
Fannie Mae said four of the HPSI’s six components increased month-over- month in May, with consumers reporting a somewhat more optimistic view of home buying conditions and home-selling conditions.
Year-over-year, the HPSI was down 24.5 points in May.
“Although the HPSI’s precipitous declines of March and April did not continue in May, Americans’ financial, economic, and housing market concerns remain substantially elevated compared to survey history,” Fannie Mae Chief Economist Doug Duncan said in a release. “Low mortgage rates have helped cushion some of the impact of the pandemic on consumer sentiment regarding whether it’s a good time to buy a home, which picked back up this month to late-2018 levels.
“Although weakened income perceptions and continuing job loss concerns, particularly among renters, are likely weighing on many would-be buyers, purchase mortgage applications have returned to mid-March levels when pandemic response measures began ramping up,” Duncan said. “Home-selling sentiment remains severely dampened due primarily to economic concerns, though increased purchase activity may improve the confidence of some potential sellers.”
During May, the percentage of Americans who said, in general, it is a good time to buy a home increased from 48 percent to 52 percent, while the percentage who said it is a bad time to buy decreased from 46 percent to 39 percent. As a result, the net share of Americans who said it is a good time to buy increased 11 percentage points.
May’s HPSI found Americans’ confidence about the job economy remained static. The percentage of Americans who said they are not concerned about losing their job in the next 12 months decreased from 76 percent to 75 percent, while the percentage who said they are concerned increased from 23 percent to 24 percent.
Additionally, the percentage of Americans who in May said their household income is significantly higher than it was 12 months ago decreased from 20 percent to 18 percent; and the percentage who said their household income is significantly lower decreased from 21 percent to 19 percent.
“As lockdown restrictions begin to ease across the country, we expect economic recovery to be largely shaped by consumers’ decisions regarding when and how to reengage in the economy,” Duncan said.