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» VISIT US ONLINE @ DSNEWS.COM 21 HOUSING SENTIMENT HITS ALL-TIME HIGH Fannie Mae has released the latest installment of its monthly Home Purchase Sentiment Index (HPSI), with the Index rising 3.7 points in January 2018 to hit an all-time survey high of 89.5. e HPSI is also up 6.8 points year-over-year. "HPSI rebounded from last month's dip to a new survey high in January, in large part due to the spike in consumers' net expectations that home prices will increase over the next year," said Doug Duncan, SVP and Chief Economist at Fannie Mae. "Results may continue to fluctuate over the coming months as consumers sort out the implications of the newly passed tax legislation on their household finances. Over the past year, continued home price growth has helped spur a sizable increase in the net share of consumers who say it's a good time to sell a home but also a modest weakening in the net share who say it is a good time to buy. At the start of 2018, it is still too early to determine the overall effect of the new tax legislation on housing, and we will need to see whether positive impacts on both housing demand and supply materialize in the coming months." e Home Purchase Sentiment Index (HPSI) culls data from Fannie Mae's National Housing Survey (NHS), compiling a single score that "reflects consumers' current views and forward-looking expectations of housing market conditions." e survey asks 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 than they were a year earlier." Breaking the HPSI results down further, the net share of Americans who said it was a good time to purchase a house rose to 27 percent, a three percent increase that overcome a dropoff in sentiment from the month prior. e net share of respondents who said they believed it was a good time to sell their home also rose, up four percent to 38 percent. Looking further down the road, the net share of respondents who believe that home prices will rise jumped up eight percentage points to 52 percent in January, hitting a new survey high. e net percentage who said mortgage rates would decrease within the next 12 months rose two percentage points, but that still left it at -50 percent. As far as general economic concerns, fewer Americans expressed concerns about losing their jobs—the net share who said they were not concerned about the prospect rose by five percentage points to 73 percent. Finally, the net share of respondents who said their household income had significantly increased over the past 12 months remained flat at 16 percent month- over-month. IS THE MARKET IN A CONSTANT TUG-OF-WAR? New consumer survey data from the National Association of Realtors (NAR) was released reporting that non-homeowners' main motivators for deciding to buy a home are lifestyle changes, improvements in their financial situation, and having that part of the American Dream. However, the constantly fluctuating state of the market isn't aligning with potential buyers' desires. NAR's survey titled, "Aspiring Home Buyers Profile" analyzed 2017 quarterly consumer insights from its Housing Opportunities and Market Experience (HOME) survey of non- homeowners for both renters and those living with a family member. As a result of the survey, over half—at 56 percent—of non-owners indicated they could not afford to buy a home each quarter, with the share feeling this way reaching its highest in the last three months of the year. According to Lawrence Yun, Chief Economist for NAR, severe inventory shortages are making homebuying less affordable and are dimming optimism among many renters who desire to be homeowners. "A tug-of-war continues to take place in many markets throughout the country, where consistently solid job creation is fueling demand, but the lack of supply is creating affordability constraints that are ultimately pulling aspiring buyers further away from owning," he said. "ese extremely frustrating conditions continue to be most apparent at the lower end of the market, which is why the overall share of first- time buyers remains well below where it should be given the strength of the job market and economy." e rapid price growth is also impacting consumers' feelings towards homeownership. After reaching a high of 62 percent in Q 3 2017, the percentage of respondents who believe now is a good time to buy decreased to 58 percent by the end of 2017. As for 2018, Yun anticipates that housing demand may increase by the millennial generation getting older and looking into different lifestyles. In fact, the survey discovered that the main reasons non-owners would buy a home in the future include getting married, starting a family or retiring, followed by an improvement in their financial situation, and the desire to settle down in one location. "Housing demand in 2018 will be fueled by more millennials finally deciding to marry and have kids and the expectations that solid job growth and the strengthening economy will push incomes higher," said Yun. "However, with prices and mortgage rates also expected to increase, affordability pressures will persist." Yun continued, "at is why it is critical for much of the country to start seeing a significant hike in new and existing housing supply. Otherwise, many would-be first-time buyers will be forced to continue renting and not reach their dream of being a homeowner."

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