The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^®(HPSI) increased 2.1 points in February to 72.8, inching higher for the third consecutive month, due primarily to increased optimism around home-selling conditions. In February, 65% of consumers said it's a good time to sell a home, up from 60% last month. The share of those who believe it's a good time to buy a home ticked up slightly this month but remains at an extremely pessimistic 19%. Additionally, a plurality of consumers continues to believe that mortgage rates will go down over the next 12 months, although on net that component fell slightly this month. Overall, the full index is up 14.8 points year over year.

"The HPSI increased for the third straight month, continuing its slow but steady rise from the low-level plateau observed through much of 2023; and consumer sentiment toward housing now rests firmly above where it was this time last year," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "Consumer attitudes toward home-selling conditions increased markedly in February, with current homeowners, in particular, expressing greater optimism that it's a 'good time to sell,' a development that may foreshadow an upcoming increase in existing home listings. Additionally, despite the recent uptick in rates, consumers remain relatively optimistic that mortgage rates will decrease over the next 12 months. If their expectations come true and rates move closer to the 6-percent mark by the end of 2024, as we currently expect, then it's likely that consumer sentiment on both sides of the transaction will improve, perhaps leading to a further thawing of the housing market. A decline in mortgage rates – and the resulting uptick in sentiment – would obviously bode well for the upcoming spring homebuying season, although affordability will likely remain a significant challenge for buyers, at least until there's a meaningful addition to net supply."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased in February by 2.1 points to 72.8. The HPSI is up 14.8 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 increased from 17% to 19%, while the percentage who say it is a bad time to buy decreased from 83% to 81%. As a result, the net share of those who say it is a good time to buy increased 4 percentage points month over month.

• Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home increased from 60% to 65%, while the percentage who say it's a bad time to sell decreased from 40% to 35%. As a result, the net share of those who say it is a good time to sell increased 11 percentage points month over month.

• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months increased from 37% to 42%, while the percentage who say home prices will go down increased from 22% to 23%. The share who think home prices will stay the same decreased from 40% to 34%. As a result, the net share of those who say home prices will go up in the next 12 months increased 4 percentage points over month.

• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 36% to 35%, while the percentage who expect mortgage rates to go up increased from 28% to 32%. The share who think mortgage rates will stay the same decreased from 35% to 32%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 5 percentage points month over month.

• Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 82% to 78%, while the percentage who say they are concerned increased from 18% to 22%. As a result, the net share of those who say they are not concerned about losing their job decreased 8 percentage points month over month.

• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 17% to 19%, while the percentage who say their household income is significantly lower decreased from 13% to 11%. The percentage who say their household income is about the same increased from 69% 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 5 percentage points month over month.