Millennials finally look to buy
Fannie Mae’s Home Purchase Sentiment Index showed an all-time high in consumers confident about the housing market.
The HPSI increased 3.3 points in July to 86.5, up from last month’s 83.2.
The HPSI distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey into a single number. The number reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making.
All six of the HPSI components increased in July. The net share of consumers who expect home prices to go up over the next year increased the most at eight percentage points after a decrease in June. The net share of consumers who expect mortgage rates to go down over the next year increased five percentage points. The household income component also rose three percentage points after a decrease in June.
While mortgage interest rates had been inching up over the past few weeks, a disappointing advance estimate on the second-quarter GDP sent mortgage rates right back down last week.
The share of consumers who said they would buy a home if they moved increased to 67%, whereas the share who said they would rent decreased to 26%, equaling the all-time low for the National Housing Survey.
“The HPSI reached a new survey high in July, but enthusiasm should be tempered because the increase only returns the index to a very gradual upward trend,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers.”
“Whether the shift in sentiment in July toward buying rather than renting on their next move holds up or is a temporary reaction to their view that rents are on the rise and mortgage rates will be lower, we will see,” Duncan said. “However, we are getting set to release some additional research in early August showing evidence of a broader move by older millennials in the direction of ownership.”
The net share of Americans who say now is a good time to buy a house increased one percentage point to 33% in July. Those who said it was a good time to sell a home rose two percentage points in July to 20%, a new survey high for the second consecutive month.
The share of Americans who said they aren’t concerned with losing their job rose one percentage point in July to 69%, and those who said their household income is significantly higher than a year ago rose three percentage points to 11% after a sharp decline in June.