Momentum in Consumer Housing Confidence Slows

Washington, D.C. – July 9, 2018 (PRNewswire) The Fannie Mae Home Purchase Sentiment Index® (HPSI) fell 1.6 points in June to 90.7 after reaching new survey highs in April and May. The decline can be attributed to decreases in four of the six HPSI components. The net share of respondents who said now is a good time to buy a home remained unchanged in June. However, the net share who reported that now is a good time to sell a home increased 1 percentage point month over month. Americans expressed a decreased sense of job security, with the net share who say they are not concerned about losing their job falling 2 percentage points this month. Additionally, the net share reporting that their income is significantly higher than it was 12 months ago decreased 2 percentage points in June. Finally, the net share of consumers who said mortgage rates will go down over the next 12 months fell 4 percentage point this month, while the net share who said home prices will go up in the next 12 month decreased 3 percentage points.

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“After several years of steadily climbing, HPSI’s slowing upward trend suggests the index may be reaching a plateau,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Tight supply and lackluster income growth continue to weigh on housing activity, and consumer expectations for home price growth over the next 12 months have moderated. However, consumers expressed increased optimism about the direction of the economy and their personal financial situations over the next 12 months, with both measures matching previous survey highs this month.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2018 Home Purchase Sentiment Index (HPSI) decreased in June by 1.6 points to 90.7. The HPSI is up 2.4 points compared with the same time last year.

  • The net share of Americans who say it is a good time to buy a home remained unchanged at 28%.
  • The net share of those who say it is a good time to sell a home rose 1 percentage points to 47%, reaching a new survey high for the third straight month.
  • The net share of Americans who say home prices will go up in the next 12 months fell 3 percentage points from last month to 46%.
  • The net share of those who say mortgage rates will go down over the next 12 months decreased 4 percentage points to -53%.
  • The net share of Americans who say they are not concerned about losing their job fell 2 percentage points from last month’s survey high to 76%.
  • The net share of those who say their household income is significantly higher than it was 12 months ago fell 2 percentage points to 19%.

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 than they were a year earlier.

ABOUT FANNIE MAE’S NATIONAL HOUSING SURVEY

The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey (NHS) polled approximately 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used 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). As cell phones have become common and many households no longer have landline phones, the NHS contacts 70 percent of respondents via their cell phones (as of January 2018). 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 stabilize the housing market in the near-term, and provide support in the future. The June 2018 National Housing Survey was conducted between June 1, 2018 and June 25, 2018. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by PSB, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS

For detailed findings from the June 2018 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.

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.

First-Time Home Buyer Demand Resilient to Rising Rates, According to First American Real Estate Sentiment Index

Continued positive economic news and confidence that buyers will remain undeterred, even if rates exceed 5.5 percent, bode well for the real estate market in 2018, says Chief Economist Mark Fleming

Santa , CA – June 12, 2018 (BUSINESS WIRE) First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released First American’s proprietary Real Estate Sentiment Index (RESI) for the second quarter of 2018. The RESI is based on a quarterly survey of independent title agents and other real estate professionals, providing a unique gauge on the real estate market using the crowd-sourced wisdom and expertise of real estate experts.

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Chief Economist Analysis: Rising Rates and the First-Time Home Buyer

“Given the strong likelihood of rising mortgage rates in 2018, many savvy real estate market observers are curious how rising rates may impact demand, especially among millennial first-time home buyers,” said Mark Fleming, chief economist at First American. “As part of our quarterly RESI, we recently surveyed title insurance agents and real estate professionals across the nation for their perspective on how sensitive they thought first-time homebuyers were to rising mortgage rates and at what rate they would withdraw from the market.

“According to the title agents and real estate professionals surveyed, nearly 87 percent of first-time home buyers were in the prime home-buying age of 26-35, which corresponds with the millennial generation,” said Fleming.

“On a national level, the title agents and real estate professionals surveyed believe that mortgage rates would need to hit 5.6 percent, 1.0 percentage point above the current rate, before first-time home buyers withdraw from the market,” said Fleming. “We asked the same question in the first quarter of 2017, and title agents and real estate professionals cited 5.4 percent as the mortgage rate at which first-time home buyers would withdraw from the market.

“The increase in the perceived mortgage rate tipping point for first-time home buyer demand indicates that survey respondents may see more runway in the current housing market,” said Fleming. “This may indicate they realize that the housing market is more resilient to mortgage rate increases than they thought a year ago.

“Even though the Fed is widely expected to raise the Federal Funds rate multiple times this year, most forecasts suggest mortgage rates will just reach 5 percent,” said Fleming. “Based on our second quarter RESI results, purchase market demand should not be materially impacted by any modest increase in mortgage rates.”

The No. 1 Obstacle to Home Buyers: Limited Supply

“However, while rising interest rates may not deter first-time home buyers, lack of inventory might. When asked what the primary obstacle to becoming a homeowner was, 35.3 percent of title agents and real estate professionals responded with limited inventory of homes they like,” said Fleming. “The second most cited obstacle was overall affordability (30.1 percent), followed by down payment (28.3 percent).

“The housing market is facing its greatest supply shortage in 60 years of record keeping, according to the Federal Reserve Bank of Kansas City. The ongoing housing supply shortage will make it difficult for first-time buyers to find a home to buy, even when they are financially ready,” said Fleming.

“Title agents and real estate professionals do not believe increasing mortgage rates will have a significant impact on the housing market in 2018. Continued positive economic news and confidence that buyers will remain undeterred, even if rates exceed 5.5 percent, bode well for the real estate market in 2018,” said Fleming. “However, more than a third of title agents and real estate professionals see limited supply as the primary obstacle to first-time home buyers.”

Purchase Market Outlook Remains Positive

“Overall, optimism among title agents and real estate professionals decreased this quarter, likely because they indicated refinance transaction volume is expected to fall in the coming year. However, while their outlook fell for purchase transaction volume growth from last quarter, it remains positive,” said Fleming. “Increasing mortgage rates clearly impacted optimism for the refinance market.”

“The title agents and real estate professionals surveyed expect residential house prices to increase by 4.2 percent in the next year. This is up 0.7 percentage points from last quarter, and 0.1 from the previous year,” said Fleming. “The expectation for further price appreciation is not surprising, given the market dynamics at play in the housing market today that are preventing more existing homeowners from selling their homes and potentially alleviating some of the supply shortage.”

Second Quarter 2018 Real Estate Sentiment Index

  • Overall, confidence in transaction volume growth over the next 12 months decreased 10.18 percent from the first quarter in 2018, and fell 14.3 percent compared with a year ago.
  • Confidence in purchase transaction volume growth over the next 12 months decreased 5.8 percent from last quarter, and fell 8.1 percent compared with a year ago.
  • Confidence in refinance transaction volume growth over the next 12 months decreased by 16.2 percent from last quarter, and fell 22.2 percent year over year.
  • Prices across all property types are expected to increase by 2.5 percent over the next 12 months.

Second Quarter 2018 RESI: Top 5 States for Residential Transaction Growth Outlook

  • Residential: The five states with the greatest increase in title agent and real estate professional confidence in residential purchase transaction volume growth as compared with a year ago are: New Mexico (+45.5 percent), Arkansas (+34.7 percent), New Hampshire (+27.3 percent), Oklahoma (+25.0 percent) and Alabama (+21.9 percent).

Second Quarter 2018 RESI: Top 5 States for Residential Price Growth Outlook

  • Residential: The five states in which title agents and real estate professionals had the highest predictions for residential price growth in the coming year are: Nevada (+9.1 percent), Washington (+8.8 percent), Missouri (+6.8 percent), Tennessee (+6.8 percent) and Florida (+6.7 percent).

What Do the RESI Number Values Mean?

Title insurance agents and real estate professionals are experts in their local real estate markets and have valuable insight. First American’s proprietary Real Estate Sentiment Index is based on a quarterly survey of independent title agents and other real estate professionals, providing a unique gauge on the real estate market using the crowd-sourced wisdom and expertise of real estate experts.

Next Release

The next release of the First American Real Estate Sentiment Index will be posted in September 2018.

Methodology

The methodology statement for the First American Real Estate Sentiment Index is available at www.firstam.com.

Disclaimer

Opinions, estimates, forecasts and other views contained in this page are those of First American’s Chief Economist, do not necessarily represent the views of First American or its management, should not be construed as indicating First American’s business prospects or expected results, and are subject to change without notice. Although the First American Economics team attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. © 2017 by First American. Information from this page may be used with proper attribution.

About First American

First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; and banking, trust and wealth management services. With total revenue of $5.8 billion in 2017, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2018, First American was named to the Fortune 100 Best Companies to Work For® list for the third consecutive year. More information about the company can be found at www.firstam.com.

Contacts

First American Financial Corporation
Media Contact:
Marcus Ginnaty
(714) 250-3298
Corporate Communications

or

Investor Contact:
Craig Barberio
(714) 250-5214
Investor Relations

Housing Sentiment Remains Volatile, Edges Back Up

Washington, D.C. – April 9, 2018 (PRNewswire) The Fannie Mae Home Purchase Sentiment Index® (HPSI) rose 2.5 points in March to 88.3, reversing last month’s decrease. The increase can be attributed to increases in three of the six HPSI components. The net share of respondents who said now is a good time to buy a home increased 10 percentage points compared to February. Additionally, the net share who reported that now is a good time to sell a home increased 3 percentage points. The net share who said home prices will go up in the next 12 months decreased 3 percentage points in March, while the net share of consumers who said mortgage rates will go down over the next 12 months also increased 5 percentage points. Americans expressed no change in their sense of job security, with the net share who say they are not concerned about losing their job staying flat month over month. Finally, the net share reporting that their income is significantly higher than it was 12 months ago was also unchanged.

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“The HPSI’s recent run of volatility continued in March, as it recovered last month’s loss and remained within the five-point range of the past twelve months,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The primary driver of this month’s increase was the sizable rise in the net share of consumers who think it’s a good time to buy a home, which returned the indicator to its year-ago level. On the whole, a slight majority of consumers continue to express optimism regarding the overall direction of the economy.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2018 Home Purchase Sentiment Index (HPSI) increased in March by 2.5 points to 88.3. The HPSI is up 3.8 points compared with the same time last year.

  • The net share of Americans who say it is a good time to buy a home increased 10 percentage points to 32%.
  • The net share of those who say it is a good time to sell rose 3 percentage points to 39%, matching the survey high last seen in June 2017.
  • The net share of Americans who say home prices will go up fell 3 percentage points to 42% in March, continuing the decreasing trend from last month.
  • The net share of those who say mortgage rates will go down over the next 12 months rose 5 percentage points to -52%.
  • The net share of Americans who say they are not concerned about losing their job remained at 71% in March.
  • The net share of those who say their household income is significantly higher than it was 12 months ago remained at 17%.

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 than they were a year earlier.

ABOUT FANNIE MAE’S NATIONAL HOUSING SURVEY

The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey (NHS) polled approximately 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used 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). As cell phones have become common and many households no longer have landline phones, the NHS contacts 70 percent of respondents via their cell phones (as of January 2018). 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 stabilize the housing market in the near-term, and provide support in the future. The March 2018 National Housing Survey was conducted between March 1, 2018 and March 25, 2018. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by PSB, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS

For detailed findings from the March 2018 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.

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.