Housing Sentiment Finishes 2024 Higher Despite December Dip

Rhea-AI Summary

Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased 1.9 points to 73.1 in December 2024, yet remained 5.9 points higher than the previous year, primarily driven by mortgage rate optimism. 42% of consumers expect mortgage rates to decline over the next 12 months, down from 45% in November but significantly higher than December 2023's 31%.

The percentage of respondents viewing it as a good time to buy a home slightly decreased from 23% to 22%, while those considering it a good time to sell declined from 64% to 63%. Home price expectations remained stable, with 38% expecting prices to increase. The survey also showed 77% of employed respondents were not concerned about job loss, down from 78%, while household income sentiment improved slightly.

Fannie Mae's Chief Economist suggests that despite current market challenges, improved affordability conditions are expected in 2025 through modest mortgage rate declines, slower home price growth, and higher wages.

Positive

• HPSI up 5.9 points year-over-year
• 42% of consumers expect mortgage rates to decline, up from 31% last year
• 38% expect home prices to increase
• 77% of employed respondents not concerned about job loss

Negative

• HPSI decreased 1.9 points month-over-month to 73.1
• Only 22% believe it's a good time to buy a home
• Net share of those saying it's a good time to buy decreased to -57%
• Percentage of those expecting mortgage rates to decline dropped from 45% to 42%

Mortgage Rate Optimism Primary Driver of Year-over-Year Improvement

WASHINGTON, Jan. 7, 2025 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) decreased 1.9 points in December to 73.1 but remained substantially higher than year-ago levels due in part to ongoing mortgage rate optimism. A plurality of consumers continues to expect mortgage rates to decline over the next 12 months; while December's 42% share was lower than last month's 45%, it remains meaningfully improved compared to last December's 31%. Likewise, the shares expressing optimism toward homebuying and home-selling conditions, respectively, declined slightly month over month, but both components remain up year over year. Overall, the HPSI is up 5.9 points compared to this time last year.

"Even though the HPSI fell to end the year, consumer sentiment toward the housing market finished 2024 substantially above year-ago levels, attributable in part to respondents' ongoing expectations that mortgage rates will decline," said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. "However, just over one-in-five consumers believes it is a 'good time' to buy a home – although that share has risen over the last year, too, after reaching an all-time low of 14% in Q4 2023. While respondents remain discouraged by the pandemic-era run-up in home prices and mortgage rates, the upward trend in homebuying sentiment in 2024 may reflect a slow acclimatization to the generally less-affordable market conditions. As noted in our recently published predictions-for-2025 forecast commentary, we expect a modest decline in mortgage rates, decelerating home price growth, and higher wage growth to improve the relative affordability of purchasing a home in the new year, though consumers' experiences will likely differ depending on where they live. As such, we think home purchase opportunities will still require market savviness by would-be homebuyers in what is expected to remain, broadly speaking, a highly competitive housing market."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased 1.9 points in December to 73.1. The HPSI is up 5.9 points compared to the same time last year. Read the full research report for additional information.

• Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 23% to 22%, while the percentage who say it is a bad time to buy increased from 77% to 78%. As a result, the net share of those who say it is a good time to buy decreased 3 percentage points month over month to negative 57%.
• Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home decreased from 64% to 63%, while the percentage who say it's a bad time to sell increased from 35% to 36%. As a result, the net share of those who say it is a good time to sell decreased 2 percentage points month over month to 27%.
• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months remained unchanged since last month at 38%, while the percentage who say home prices will go down increased from 25% to 27%. The share who think home prices will stay the same decreased from 36% to 35%. As a result, the net share of those who say home prices will go up in the next 12 months decreased 1 percentage point month over month to 11%.
• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 45% to 42%, while the percentage who expect mortgage rates to go up remained unchanged since last month at 25%. The share who think mortgage rates will stay the same increased from 29% to 32%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 4 percentage points month over month to 16%.
• Job Loss Concern: The percentage of employed respondents who say they are not concerned about losing their job in the next 12 months decreased from 78% to 77%, while the percentage who say they are concerned increased from 20% to 22%. As a result, the net share of those who say they are not concerned about losing their job decreased 4 percentage points month over month to 54%.
• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 16% to 17%, while the percentage who say their household income is significantly lower decreased from 12% to 11%. The percentage who say their household income is about the same decreased from 71% to 70%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 1 percentage point month over month to 6%.

About Fannie Mae's Home Purchase Sentiment Index
The Home Purchase Sentiment Index^® (HPSI) distills information about consumers' home purchase sentiment from Fannie Mae's National Housing Survey^® (NHS) into a single number. The HPSI reflects consumers' current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision-making. The HPSI is constructed from answers to six NHS questions that solicit consumers' evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask 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 or lower than they were a year earlier.

About Fannie Mae's National Housing Survey
The National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls a representative sample of adult household financial decision makers in the United States, to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances, and overall confidence in the economy. Each respondent is asked more than 100 questions, making the NHS one of the most detailed longitudinal surveys of its kind to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). For more information, please see the Technical Notes.

Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to support the housing market. The December 2024 National Housing Survey was conducted between December 1, 2024, and December 13, 2024. Most of the data collection occurred during the first two weeks of this period. The latest NHS was fielded exclusively through AmeriSpeak^®, NORC at the University of Chicago's probability-based panel, in coordination with Fannie Mae and PSB Insights. Calculations are made using unrounded and weighted respondent-level data to help ensure precision in NHS results from wave to wave. As a result, minor differences in calculated data (summarized results, net calculations, etc.) of up to 1 percentage point may occur due to rounding.

Detailed HPSI & NHS Findings
For detailed findings from the Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

To receive e-mail updates with other housing market research from Fannie Mae's Economic and Strategic Research Group, please click here.

About the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Mark Palim, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets.

About Fannie Mae
Fannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:
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Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group or survey respondents included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs, and other views published by the ESR Group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

 

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SOURCE Fannie Mae

FAQ

What was Fannie Mae's (FNMA) HPSI score in December 2024?

Fannie Mae's Home Purchase Sentiment Index (HPSI) was 73.1 in December 2024, decreasing 1.9 points from November but remaining 5.9 points higher than December 2023.

What percentage of consumers expect FNMA mortgage rates to decline in 2025?

42% of consumers expect mortgage rates to decline over the next 12 months, down from 45% in November but higher than December 2023's 31%.

What is the current sentiment towards buying homes according to FNMA's December 2024 survey?

Only 22% of respondents believe it's a good time to buy a home, while 78% say it's a bad time, resulting in a net negative sentiment of -57%.

What are FNMA's housing market expectations for 2025?

Fannie Mae expects modest mortgage rate declines, decelerating home price growth, and higher wage growth to improve relative home affordability in 2025.

How has consumer sentiment about home selling changed in FNMA's December 2024 survey?

The percentage of respondents who say it's a good time to sell decreased from 64% to 63%, with a net positive sentiment of 27%.