This video is the latest in our Monday with Matthew series featuring Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most current US housing data to keep you well informed about what’s happening in the real estate market.

Hi there! I’m Windermere Real Estate’s chief economist, Matthew Gardner, and welcome to the latest episode of Mondays with Matthew.

Today we are going to take a look at the latest Home Purchase Sentiment Index survey just released by Fannie Mae. And for those of you who may not be familiar with this survey, it’s actually quite important and I’m following it closely because it’s the only national, monthly consumer survey that focuses primarily on housing.

The survey shows responses from 1,000 consumers across the country to approximately 100 survey questions on a wide variety of housing-related topics. Now don’t worry, we’re not going to look at all 100 questions — just the questions consumers ask about evaluating housing market conditions and also covering topics related to their home purchase decisions.

So, as you can see here, the overall index was trending higher quite consistently until the pandemic happened, which had huge, but temporary, consequences. And if you look at the past 3 years, you can get a better idea of ​​the speed of the pandemic-induced decline – quite remarkable.

Now you will also see that the index recovered quite quickly; however, it fell again last fall as the pandemic didn’t go away at the speed many had hoped – it rose again this spring but retreated in recent months, but that said, the August index level essentially matched the level seen in July.

Now let’s look at the questions used to create the index number and how consumers responded.

Three lines on the same chart on a slide titled

When asked whether it was a good time to buy a home, the percentage who agreed with that statement rose from 28 to 32%, while the percentage who thought it was a bad time to buy fell from 66 to 63 %. And as a result, the net share of those who say it is a good time to buy has increased by 7 points month after month and it is noteworthy that this is the first time that the net share has improved in the past 4 months.

What I’m seeing here is that – although it’s a modest improvement, the general consensus is that it’s not a good time to buy and that sentiment is driven by two things: one – there are still not enough homes on the market, and two, rapidly rising prices put some people off.

Three lines in the same chart showing seller sentiment.  The presentation slide titled 'Is Now a Good Time to Sell?  The x-axis of the chart shows percentages from -60% to 100% and the y-axis shows the dates from August 2018 to August 2021. The navy line represents those who think it's a good time to sell, the light blue line indicates those who think it is a bad time to sell, and the red line indicates the net percentage of people who think it is a good time to sell.  The navy line is usually at the top and is in the 65% range, until March 2020 when it flips over with the light blue line.  They will switch back in August 2020 when they are 48% and 44%.  The difference has been growing in recent months, reaching a 54% net difference on August 21.

And when they were asked if they thought it was a good time to sell their home, it was interesting to see that the share dropped from 75 to 73%, while the percentage who said it was a bad time to sell dropped by 1. point fell to 19% and as a result, the net share of those who said it was a good time to sell fell by 1%, but it still indicates more owners think now is a good time to sell then not.

Three lines on the ame-grah to compare different sentiments about whether house prices will rise in the next 12 months.  The slide is titled

Now looking at the direction of house prices over the next 12 months, the percentage who think house prices will rise fell from 46 to 40%, while the percentage who expected house prices to fall rose from 21 to 24%.

As a result, the net share of Americans who say home prices will rise has fallen by 9 points – from 25% to 16%.

While this may sound worrying, I should add that the proportion of respondents who believed house prices will remain stable over the next year has increased from 27% to 31%.

Three lines in the same chart comparing people's different expectations, taking into account the mortgage rates over the next 12 months.  The slide is titled

On the financing side, the proportion who think mortgage rates will rise in the next 12 months fell from 57 to 53%, while the proportion who thought interest rates would go lower rose from 5% to 6%. of Americans who believed that mortgage rates would fall in the next 12 months rose 5%, and with 35% of respondents who believe that interest rates will remain stable – it’s clear to me that a vast majority are not worried about rising mortgage interest.

The takeaways for me so far are that consumers have both tempered their recent pessimism about home buying conditions. and their upward expectations of house price growth.

Most notably, a higher proportion of consumers believe that now is a good time to buy a home – although that population remains firmly in the minority at just 32% – while the persistent multiplicity of respondents who expect house prices will rise over the next 12 months fell, but was still well above the 24% of consumers who think house prices will fall.

Now, there are two more questions worth looking at that are not directly related to home buyers and sellers, but are nonetheless important when looking at work and income.

With the title

The percentage of respondents who said they are not concerned about losing their job in the next 12 months remains very high at 82%, but it decreased by 2 points month-on-month, while the percentage who said they were concerned , ticked. up to 15% from 13%. As a result, the net share of Americans who say they are not concerned about losing their jobs has fallen 4 percentage points month over month, but remains well above the level of a year ago.

This slide is titled

And finally, when households were asked about their own personal finances, the percentage of respondents who said their household income is now significantly higher than 12 months ago dropped a point to 26%, while the percentage who said their household income is significantly lower. up to 12%.

As a result, the net share of those who said their household income was significantly higher than a year ago rose 1 percent month over month, coming in 5 points higher than a year ago. It’s also worth noting that most said their household income is about the same as it was a year ago, and that proportion rose from 56 all the way to 59%.

Looking at all the aggregate numbers, the index level was relatively flat in August, with three of the index’s six components rising month over month while the other three fell, which tells me that continued strong housing demand and absolutely favorable conditions for home sellers may well offset broader concerns about the Delta variant of COVID-19, as well as rising inflation, both of which have negatively impacted other consumer confidence indices.

Most consumers continued to say that it is a good time to sell a house – but a bad time to buy – most often citing high house prices and a lack of supply as their main reason.

While the “good time to buy” component was still close to the survey’s lowest level, it rose for the first time since March, perhaps partly reflecting the very favorable mortgage interest environment and growing expectations that house prices will rise in the near future. moderate in the coming year. A sentiment I personally agree with.

I hope you found this month’s discussion interesting. As always if you have any questions or comments on this subject please do get in touch but in the meantime stay safe out there and I look forward to seeing you all again next month.