Overall Housing Sentiment Ticks Higher Despite Consumers' Growing Affordability Concerns

Rhea-AI Summary

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased 0.3 points to 73.4 in January, showing a slight recovery after December's decline. The increase was driven by improved consumer optimism toward homebuying and home-selling conditions, along with higher expectations for home price appreciation.

However, consumer optimism about mortgage rates declined significantly, with a 13-percentage-point drop in those expecting rates to decrease. Additionally, 65% of consumers now expect rental prices to increase, up 8 percentage points from December.

Key findings include: unchanged sentiment about buying homes (22% good time, 78% bad time), stable selling conditions (63% good time, 36% bad time), increased home price rise expectations (43%, up from 38%), and decreased mortgage rate optimism. Fannie Mae forecasts mortgage rates to end 2025 around 6.5%, with multifamily rents expected to grow between 2.0% and 2.5% this year.

Positive

• HPSI increased 0.3 points to 73.4, up 2.7 points year-over-year
• Home price expectations improved with net share increasing 9 percentage points
• Household income stability reached a new survey high at 73%

Negative

• Consumer optimism about mortgage rates declined 13 percentage points
• 78% believe it's a bad time to buy a home
• 65% expect rental prices to increase, up 8 percentage points
• Mortgage rates expected to remain elevated around 6.5% through 2025

Sharply Higher Share of Survey Respondents Expects Rent Prices to Rise

WASHINGTON, Feb. 7, 2025 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) increased 0.3 points in January to 73.4, bouncing back slightly after falling last month for the first time since July. Improvements in consumer optimism toward both homebuying and home-selling conditions, along with even greater expectations that home prices will rise over the next 12 months, drove the increase. However, after a surge in mortgage rate optimism in the second half of last year, January saw a 13-percentage-point decline in the net share of consumers who believe mortgage rates will go down in the next 12 months. In addition, the share of consumers who expect rental prices will go up increased 8 percentage points from last month to 65%. Year over year, the HPSI is up 2.7 points.

"Consumers seem increasingly pessimistic that housing affordability conditions will improve across the board, as a growing share expects home prices, rent prices, and mortgage rates will all go up," said Kim Betancourt, Vice President of Multifamily Economics and Strategic Research. "The lower optimism toward the mortgage rate outlook was largely expected, as rates have continued to stay elevated and even crossed the 7% threshold in mid-January. As noted in our latest forecast, we currently expect mortgage rates to end 2025 around 6.5%, relatively little changed from where we are today, which will likely continue to hinder relief for housing affordability and home sales activity."

Betancourt continued: "On the rental side, consumers have indicated a sharply growing expectation over the past two months that rent prices will increase. This mirrors our expectation that multifamily rents will grow between 2.0% and 2.5% this year — up from an estimated 1.0% last year. Even though it remains relatively cheaper for consumers to rent than buy in nearly every U.S. metro, we expect affordability issues will remain a real challenge for both renters and homeowners alike for the foreseeable future."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased 0.3 points in January to 73.4. The HPSI is up 2.7 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 (22%) and the percentage who say it is a bad time to buy (78%) both stayed the same from last month. The net share of those who say it is a good time to buy increased 2 percentage points month over month to -55%.
• Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home (63%) and the percentage who say it's a bad time to sell (36%) both remained unchanged month over month. The net share of those who say it is a good time to sell increased 1 percentage point month over month to 28%.
• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months increased from 38% to 43%, while the percentage who say home prices will go down decreased from 27% to 22%. The share who think home prices will stay the same decreased from 35% to 34%. As a result, the net share of those who say home prices will go up in the next 12 months increased 9 percentage points month over month to 20%.
• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 42% to 35%, while the percentage who expect mortgage rates to go up increased from 25% to 32%. The share who think mortgage rates will stay the same increased from 32% to 33%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 13 percentage points month over month to 3%.
• Job Loss Concern: The percentage of employed respondents who say they are not concerned about losing their job in the next 12 months increased from 77% to 78%, while the percentage who say they are concerned stayed at 22%. As a result, the net share of those who say they are not concerned about losing their job increased 2 percentage points month over month to 56%.
• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago remained at 17%, while the percentage who say their household income is significantly lower decreased from 11% to 9%. The percentage who say their household income is about the same increased from 70% to 73%, a new survey high. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 2 percentage points month over month to 8%.

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 January 2025 National Housing Survey was conducted between January 2, 2025, and January 21, 2025. 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: fanniemae.com | X (formerly Twitter) | Facebook | LinkedIn | Instagram | YouTube | Blog

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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 is the current Fannie Mae (FNMA) Home Purchase Sentiment Index for January 2025?

The Fannie Mae Home Purchase Sentiment Index (HPSI) increased 0.3 points to 73.4 in January 2025, up 2.7 points year-over-year.

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

35% of consumers expect mortgage rates to decrease in the next 12 months, down from 42% in the previous month.

What are Fannie Mae's projected mortgage rates for the end of 2025?

Fannie Mae expects mortgage rates to end 2025 around 6.5%, relatively unchanged from current levels.

What is the expected rental price growth for Fannie Mae properties in 2025?

Fannie Mae expects multifamily rents to grow between 2.0% and 2.5% in 2025, up from an estimated 1.0% in the previous year.

What percentage of respondents believe it's a good time to sell a home according to FNMA's January 2025 survey?

63% of respondents believe it's a good time to sell a home, while 36% say it's a bad time to sell.