The Fannie Mae Home Purchase Sentiment Index (HPSI) jumped 3.7 points in January to 89.5, an all-time high for the survey.
The increase reversed a trend the previous month, which saw a decrease in the index.
“HPSI rebounded from last month’s dip to a new survey high in January, in large part due to the spike in consumers’ net expectations that home prices will increase over the next year,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said. “Results may continue to fluctuate over the coming months as consumers sort out the implications of the newly passed tax legislation on their household finances. Over the past year, continued home price growth has helped spur a sizable increase in the net share of consumers who say it’s a good time to sell a home but also a modest weakening in the net share who say it is a good time to buy. At the start of 2018, it is still too early to determine the overall effect of the new tax legislation on housing, and we will need to see whether positive impacts on both housing demand and supply materialize in the coming months.”
Five of the six HPSI components saw increases in January. Specifically, respondents who said now is a good time to buy a home increased 3 percentage points over December to 27 percent, while the number of people who said now is a good time to sell a home increased 4 percentage points to 38 percent.
Further, those who said home prices will go up in the next 12 months increased 8 percentage points in January to 52 percent, while those who said they are not concerned about losing their job increased 5 percentage points to 73 percent.
Also, the net share of consumers who said mortgage rates will go down over the next 12 months increased 2 percentage points in January to -50 percent. Finally, the number of people who said their income is significantly higher than it was 12 months ago remained flat at 16 percent.