House shopping for sentiment hits a five-month excessive initially of the spring season
According to Fannie Mae, home buying sentiment is at its highest level since October due to three converging events: the spring buying season, increased vaccinations and stimulus checks.
The Home Purchase Sentiment Index in March was 81.7, up 5.2 points from 76.2 in February. In October 2020, the HPSI was also 81.7. In March 2020, the index was 80.8, reflecting the start of the economic fallout from the pandemic, and it would bottom at 63 a month later.
"The home sales sentiment has seen positive momentum in most consumer segments – near pre-pandemic levels and generally suggesting a strong seller market," said Doug Duncan, chief economist at Fannie Mae, in a press release. "Consumers again cited high house prices and low inventory as the main reasons this is a good time to sell."
Although the net percentage of those who said March was a good time to buy has increased compared to February, that metric has not rebounded to pre-pandemic levels. This is because "the home buying experience continues to be difficult for many of the same reasons, namely high prices and lack of supply," said Duncan.
The share of consumers rose five percentage points month on month, saying it was a good time to buy a home, from 48% in February to 53%, while those who said it was a bad time to buy to 40% fell from 43%.
Meanwhile, 61% of respondents in March said it was a good time to sell, up from 55% in February. The stock, which said it was a bad time to sell, fell to 28% from 35% in February.
Of the six components Fannie Mae uses to calculate the HPSI, the only one that was declining on a net basis, unsurprisingly, consumers were forecasting mortgage rate movements over the next 12 months.
Only 6% of respondents said they would expect mortgage rates to decline. 54% said they would go up and 34% believed they would stay the same. In the February survey, the percentages were 8%, 47% and 38%, respectively.
Regarding this double-edged sword of rising property prices, 50% of respondents in the March poll said they would go up over the next 12 months, while 29% said they would stay the same and 14% said they would go down.
In February, 47% expected prices to rise, 29% said they would stay the same, and 18% said they would fall.