Consumer confidence in housing reaches all-time high

Consumers are feeling good about the housing market. Better than they have in years, in fact.

According to Fannie Mae’s Home Purchase Sentiment Index®, consumer confidence is at an all-time high after increasing 3.3 points to 86.5 points in July. HPSI measures six factors to determine the index, and all six saw an increase. The highest growth was among consumers who anticipate that home prices will rise over the next year, which saw an 8-point increase after a decrease in June.

“The HPSI reached a new survey high in July, but enthusiasm should be tempered because the increase only returns the index to a very gradual upward trend,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers. Whether the shift in sentiment in July toward buying rather than renting on their next move holds up or is a temporary reaction to their view that rents are on the rise and mortgage rates will be lower, we will see. However, we are getting set to release some additional research in early August showing evidence of a broader move by older millennials in the direction of ownership.”

One-third of Americans said now is a good time to purchase a home, which was a 1 percent increase since June. Twenty percent said now is a good time to sell a home, which was a new survey high, and a 2% increase since June, and 41% think home prices will rise. Despite already low mortgage rates, more than one-third of respondents (36%) think they will continue to decrease over the next year.

Job security confidence has also increased. Sixty-nine percent said they are not worried about losing their job, a 1-point increase from June, while one in ten (11%) said their household income is “significantly higher” than it was a year ago, a 3 percentage point increase from June.