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57 April 2025 J O U R N A L April 2025 » CONSUMER SENTIMENT SLIPS AS AMERICANS ADJUST TO MARKET CONDITIONS D ue in major part to customers' growing pessimism about mortgage rates falling in the upcoming year, the Fannie Mae Home Purchase Sentiment Index (HPSI) fell 1.8 points to 71.6 in February. While the percentage of consumers who believe that now is a good time to sell a home fell to 62%, the percentage who believe that now is a good time to buy a home increased slightly to 24% last month. American consumers' optimism about their financial circumstances, such as household income and fear of job loss, also significantly decreased in February. The HPSI is down 1.2 points from the previous year. "In February, the HPSI saw its first year-over-year decline in nearly two years, which was mostly due to a shrink- ing share of consumers expressing optimism about the direction of mort- gage rates," said Mark Palim, Fannie Mae SVP and Chief Economist. "This growing pessimism makes sense, as mortgage rates had remained near the 7% threshold for a few months, includ- ing when we fielded this survey. The de- cline in sentiment was further impacted by consumers' growing concerns about their own personal financial situations. While some consumers may be slowly acclimating to the higher mortgage rate environment, the vast majority continue to believe it is a 'bad time' to buy a home—with high home prices cited as the primary sticking point. We continue to expect home sales activity to remain relatively light over our forecast horizon due to the ongoing lack of supply and overall unaffordability." In February, the Fannie Mae Home Purchase Sentiment Index (HPSI) dropped 1.8 points to 71.6. When com- pared to the same period last year, the HPSI is down 1.2 points. Home Purchase Sentiment Index— Americans Weigh In • Good/Bad Time to Buy: The percent- age of respondents who say it is a good time to buy a home increased from 22% to 24%, and the percentage who say it is a bad time to buy decreased from 78% to 76%. The net share of those who say it is a good time to buy increased 2 percentage points month over month to negative 53%. • Good/Bad Time to Sell: The per- centage of respondents who say it is a good time to sell a home decreased from 63% to 62%, and the percent- age who say it's a bad time to sell increased from 36% to 37%. The net share of those who say it is a good time to sell decreased 3 percentage points month over month to 25%. • Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 43% to 41%, while the percentage who say home prices will go down increased from 22% to 23%. The share that thinks home prices will stay the same increased from 34% to 35%. As a result, the net share of those who say home prices will go up in the next 12 months decreased 2 percentage points month over month to 18%. • Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 35% to 30%, while the percentage who expect mortgage rates to go up increased from 32% to 33%. The share that thinks mortgage rates will stay the same increased from 33% to 36%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 6 percentage points month over month to negative 3%. • Job Loss Concern: The percent- age of employed respondents who "In February, the HPSI saw its first year-over- year decline in nearly two years, which was mostly due to a shrinking share of consumers expressing optimism about the direction of mortgage rates." —Mark Palim, Fannie Mae SVP and Chief Economist