The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased by 5.6 percentage points in February to 88.3, a new all-time high, the Government Sponsored Enterprise said Tuesday.
Five of the six components that comprise the HPSI were up, and three hit record highs. The net share of Americans who reported that now is a good time to buy rose 11 percentage points, while the net share who believe that now is a good time to sell rose 7 percentage points.
Consumers also demonstrated greater confidence about not losing their jobs, with the net share rising 9 percentage points. On net, the share of respondents reporting that their household income is significantly higher than it was 12 months ago increased 4 percentage points. Additionally, more Americans expect home prices to go up, with the net share rising 3 percentage points. The net share of those who think mortgage rates will go down over the next 12 months remained unchanged for the third consecutive month.
“The latest post-election surge in optimism puts the HPSI at its highest level since its starting point in 2011. Millennials showed especially strong increases in job confidence and income gains, a necessary precursor for increased housing demand from first-time home buyers,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Preliminary research results from our team find that millennials are accelerating the rate at which they move out of their parents’ homes and form new households. However, continued slow supply growth implies continued strong price appreciation and affordability constraints facing millennials and first-time buyers in many markets.”