Dive Brief:
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Government-backed lender Fannie Mae's Home Purchase Sentiment Index rebounded in January after sliding for five consecutive months, clicking up two percentage points from December to 82.7 and 1.2 percentage points from the year-ago period, according to HousingWire.
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A breakdown of the index shows the number of homeowners expecting home prices to rise in the year ahead increased seven percentage points to a net share of 42%, while the share of those reporting a significant bump in household income in the past 12 months jumped five percentage points to 15%.
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Although the share of consumers identifying now as a good time to sell a house edged up two percentage points to 15% during the month, the share of consumers who think it’s a good time to buy one dipped three percentage points to 29%.
Dive Insight:
Fannie Mae Chief Economist Doug Duncan noted in a statement that, in the aftermath of the U.S. general election, consumer optimism over the economy and personal finance has been at or close to the highest levels recorded in the survey’s seven-year history.
However, he warned, income growth is needed to counter higher mortgage rates and rising home prices in order to spur homebuilding activity without widening the current affordability gap.
The National Association of Home Builders recently reported that mortgage rates on newly built homes climbed 19 basis points in December to 3.78% for the month, while home prices rose 0.8% for the period according to the latest CoreLogic Home Price Index. The index noted that prices were up 7.2% from a year earlier.
Although mortgage rates are rising, they are coming off of historical lows and confidence in market conditions remains fairly solid, with homebuilders generally expecting healthy demand levels this year. Atlanta-based PulteGroup and Fort Worth, TX–based D.R. Horton both reported in recent analyst calls that they remain optimistic over market fundamentals this year, particularly in the first-time buyer and active-adult segments.
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