Consumer sentiment for home buying stayed near its record high behind low mortgage rates and a strong job market, though the declining stock markets and COVID-19 concerns may change that soon, according to Fannie Mae.
The Fannie Mae Home Purchase Sentiment Index decreased to 92.5 in February from 93 in January, but shot up compared with 84.3 the prior year.
"The HPSI remained relatively steady in February, reflecting another month of robust consumer sentiment consistent with strong housing market data to start the year," Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a press release. "In particular, household income sentiment picked back up as more workers saw their wages rise amid tight labor market conditions, helping bolster already strong housing demand."
A 27% net share of consumers surveyed said February was a good time to buy a home, while a net 45% claimed it was a good time to sell. Over the next 12 months, a net 39% of respondents expected housing prices to rise and a net 30% anticipated mortgage rates to go up.
Of those who said February had advantageous conditions for home buying, 32% credited favorable interest rates and 23% attributed strong economic conditions. However, with stock markets floundering and the coronavirus turning into a global crisis, sentiments could greatly change in the coming months.
"Though American consumers' optimism about the direction of the economy is higher this month than at any point in the survey's nearly 10-year history, the late February stock market decline, precipitated in part by evolving expectations of the potential economic impact of the coronavirus, is not fully reflected in this month’s results due to the timing of our survey data collection, which ended Feb. 22. We may see some volatility in sentiment in the months ahead as these circumstances play out," Duncan said.
