The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index (HPSI) spiked by 5.5 points in April to a level of 66.8, its highest level since May 2022.
All six of the HPSI’s components increased from March and April, most notably in regard to whether this is a good time to buy a home (increased from 20% to 23%) and mortgage rate expectations (those predicting rates will go down in the next 12 months increased from 12% to 22%).
However, on a year-over-year measurement, the full index is down 1.7 points.
“This month’s increase in the HPSI was the largest in over two years, primarily driven by consumers’ more optimistic mortgage rate expectations,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “An increased number of respondents indicated they think mortgage rates will go down over the next year, a belief that could be due to a combination of factors, including an awareness of decelerating inflation, market suggestions that monetary conditions will ease in the not-too-distant future, and, of course, actual mortgage rate declines during the month.”
But Duncan also warned that “the bump in optimism may prove to be temporary, as consumers continue to report uncertainty about the direction of home prices – and we know that high home prices remain the primary reason given by consumers who think it’s a bad time to buy a home. Until affordability improves for a larger swath of the homebuying public, we believe home sales will remain subdued compared to previous years.”