Home purchase sentiment dips in December on tax reform concerns

by Francis Monfort10 Jan 2018
Home purchase sentiment among consumers declined in December, reflecting concerns surrounding tax reform discussions, according to the Home Purchase Sentiment Index (HPSI) released by Fannie Mae.

The HPSI slipped 2 points to 85.8. The decline reverses last month’s rise to near the all-time high recorded in September. Fannie Mae attributed the decrease to declines in four of the six HPSI components.

The HPSI found a five-percentage-point decline in the net share of respondents who said now is a good time to buy a home compared to November. The component is also down eight percentage points compared to the year-ago period.

The net share of respondents who said home prices will go up in the next 12 months fell two percentage points. Meanwhile, the net share of those who said they are not concerned about losing their job slipped six percentage points, signaling a weaker sense of job security among Americans. The net share of those who said mortgage rates will go down over the next 12 months dipped one percentage point.

The net share of respondents who said now is a good time to sell remained unchanged from November but increases 21 percentage points from December 2016. The HPSI also found a two-percentage-point increase in the net share of those who said their income is slightly higher than it was 12 months ago.

“Consumers remained cautious in their housing outlook at the end of 2017, as tax reform discussions continued. In December, mirroring the other major consumer sentiment benchmarks, the HPSI reflected this caution and declined slightly,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Entering 2018, housing affordability remains a persistent challenge, particularly in rental markets, where consumer expectations for price increases over the next 12 months reached a new survey high.”

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