Last month’s Home Purchase Sentiment Index (HPSI) fell slightly, indicating a possible slowdown on the horizon.

Fannie Mae’s latest iteration of the monthly Home Purchase Sentiment Index (HPSI) fell by a slight 0.5 points to 74.2 last month as consumers wildly differed on whether it is a good time to buy or sell a home and their outlook on the economy. When combined, these metrics may indicate a slowing of the real estate market as we move into 2022.  Overall, three of the six indicators used in the report dropped last month. Among the 1,003 heads of households surveyed, 76% responded that now is a good time to sell a home but only 26% of respondents indicated that now is a good time to buy—a record low seen by the survey. The survey also found that 44% of people expect home prices to go up over the next 12 months and 56% think mortgage rates will go up in the next 12 months.  "The HPSI's underlying components changed dramatically in the last 12 months—particularly the two related to homebuying and home-selling sentiment—and we have seen the index drift slightly downward since March 2021, an indication that the housing market may begin to soften in the coming year," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "Over the past year, low mortgage rates plus government stimulus programs helped increase mortgage demand, but the bidding-up of homes increased prices to record levels, making affordability a greater constraint for both first-time and move-up homebuyers. Among homeowners, the 'good time to buy' sentiment fell 30 percentage points over the past year to its current level of 30%; for renters it fell from 37% to 21%. Even though demand remains strong, a majority of consumers clearly have reservations about purchasing a home at current prices." 

Source: Fannie Mae