The number of participants who took part in the survey regarding Fannie Mae’s recent Home Purchase Sentiment Index® (HPSI) that reported “significantly higher household income” for 2016, rose by five points to 15 percent in January, while the portion of participants who reported it is “a good time to sell” a home increased by 2 points, from 13 to 15 percent. The number of survey participants who reported home prices will increase, increased by seven points from 35 percent to 42 percent. Overall, the index rose two points to 82.7, which represents a record high.
“Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we’ve seen in the nearly seven-year history of the National Housing Survey,” says Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae.
Though there are still a number of things to remain watchful of, including rising housing prices, low inventory levels, and policy changes that could affect the housing market, the results of this survey are encouraging overall.
According to ATTOM Data Solutions, since 2012, the average median home price has grown 60 percent, while average weekly wages have grown 1 percent. The ATTOM Q4 2016 Home Affordability Index dropped to its lowest level since the onset of the recession, with the average homebuyer needing 36.9 percent of their income to afford a median-priced home. A higher number of participants expect incomes to increase, which would bring ease to this issue.
“Any significant acceleration in housing activity will depend on whether consumers’ favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability,” Duncan says.
With regard to mortgage rates, the portion of those surveyed by Fannie Mae who reported rates “will go down” in the next year was 55 percent, while the portion of those surveyed who reported it is “a good time to buy a house” was 29 percent.
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