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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 78 January 2025 J O U R N A L CONSUMER CONFIDENCE DRIVES HOUSING SENTIMENT UP YOY T he latest Fannie Mae Home Purchase Sentiment Index (HPSI) increased 0.4 points in November to 75.0, continuing its sharp upward trend over the past year, as consumers appear to be acclimating to higher mortgage rates in today's home price environment. In November, a new record-high share of consumers indicated that they expect mortgage rates to decline over the next 12 months, while fewer respon- dents said they expect home prices to rise. While only 23% believe it's a "Good Time to Buy a Home," on net that component continued its upward trend and is now notably higher than last November's share of 14%. The share of respondents saying it's a "Good Time to Sell" remained f lat month-over-month but is also up from last year. Year over year, the HPSI is up 10.7 points. "Over the past year, we have seen a significant improvement in general consumer sentiment toward the hous- ing market, largely driven by increased optimism that mortgage rates will fall and improved perceptions of both homebuying and home-selling condi- tions," said Mark Palim, Fannie Mae SVP and Chief Economist. "Notably, this improvement in sentiment contin- ues a trend that began about two and a half years ago following the sizeable run-up in home prices during the pan- demic, and it is likely due in part to con- sumers' slow but steady acclimation to current market conditions. Of course, high home prices and high mortgage rates remain the primary reasons why the vast majority of consumers think it's a 'Bad Time to Buy'—trends that we expect to continue into the new year." The HPSI distills information about consumers' home purchase sentiment from Fannie Mae's National Housing Survey (NHS) into a single number. The HPSI ref lects consumers' current views and forward-looking expecta- tions of housing market conditions and complements existing data sources to inform housing-related analysis and de- cision-making. The HPSI is constructed from answers to six NHS questions that solicit consumers' evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher or lower than they were a year earlier. Fannie Mae's HPSI Found: • Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home increased from 20% to 23%, while the percentage who say it is a bad time to buy decreased from 80% to 77%. As a result, the net share of those who say it is a good time to buy increased six percentage points month over month to negative 54%. • Good/Bad Time to Sell: The per- centage of respondents who say it is a good time to sell a home remained unchanged at 64%, while the percentage who say it's a bad time to sell also remained unchanged at 35%. As a result, the net share of those who say it is a good time to sell remained unchanged month over month at 29%. • Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 39% to 38%, while the percentage who say home prices will go down increased from 23% to 25%. The share who think "Over the past year, we have seen a significant improvement in general consumer sentiment toward the housing market, largely driven by increased optimism that mortgage rates will fall and improved perceptions of both homebuying and home- selling conditions," —Mark Palim, SVP and Chief Economist, Fannie Mae