Consumer Housing Sentiment Reports Show Slight Improvement

Fannie Mae’s Home Purchase Sentiment Index (HPSI) dataset for 2022 is now final, and year-end data for December revealed a rise of 3.7 percentage points, settling at a rate of 61%, just above the Index low recorded in October 2022.

Three of the Index’s six key components—homebuying conditions, mortgage rate forecast, and job security—improved month over month, while the other four decreased.

Compared to November, 21% more survey participants believe that now is an “excellent time to buy a property.” The percentage of respondents (30%) who say that home prices will rise in the upcoming year has remained the same. There are still those that believe home prices will decrease. However, in 2023, we are already seeing an unexpected increase in buyer activity, which will likely prove price reduction predictions wrong. The number of respondents expecting lower mortgage rates in the coming year rose from 10% to 14%, while the proportion anticipating higher rates fell from 62% to 51%.

As the number of survey respondents concerned about losing their work within the next year reduced from 21% to 17%, it was also discovered that they are less pessimistic about their job security than last month. The index overall has increased yearly.

Housing Market Tracker: A Notable Drop in Inventory

In the week prior to last, the housing market’s inventory decreased by 4%. It is typical for housing inventory to decline in December. Still, in the second half of 2022, it became evident that higher rates had increased the number of days homes were on the market and extended the time they remained unsold. We’ve seen inventory fall faster than anticipated over the past four weeks, particularly this past week.

The data line broke a seven-week positive trend as mortgage rates increased toward the end of the year, so even with a seasonal drop in volume and the fact that many individuals don’t apply for mortgages over the holidays, something remains to be seen here.

Purchase application statistics had been positive for seven weeks before these two weeks, paralleling the decline in mortgage rates from 7.37% in November to 6.12%. Then, rates increased to back over 6.5% before the end of the year, which may have contributed to the lower purchase application data during the previous two weeks.

In 2023, if we manage to break beneath one million total active listings, it will be only the second time in recent years that this has happened.

Source:

Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.