Confidence in the U.S. economy and the housing market grew in March as the country ramped up vaccinations for COVID-19.
Fannie Mae’s Home Price Sentiment Index increased by 5.2 points from February to 81.7 in March. Year over year, the index is up 0.9 points. Four of the HPSI’s six components increased month over month, including the components related to homebuying and homeselling conditions, household income and home prices. The mortgage rate outlook component experienced the only decline.
“The significant increase in the HPSI in March reflects consumer optimism toward the housing market and larger economy as vaccinations continue to roll out, a third round of stimulus checks was distributed, and the spring homebuying season began – perhaps with even more intensity this year, since 2020’s spring homebuying season was limited by virus-related lockdowns,” Doug Duncan, Fannie Mae senior vice president and chief economist, said. “Home-selling sentiment experienced positive momentum across most consumer segments – nearly reaching pre-pandemic levels and generally indicative of a strong seller’s market.”
“Consumers once again cited high home prices and tight inventory as primary reasons why it’s a good time to sell,” Duncan said. “Alternatively, while the net ‘good time to buy’ component increased month over month, it has not recovered to pre-pandemic levels, as the homebuying experience continues to prove difficult for many of the same reasons, namely high prices and a lack of supply.”
The percentage of respondents who say it is a good time to buy a home increased from 48 percent to 53 percent, while those who said it is a bad time to buy decreased from 43 percent to 40 percent. As a result, the net share of those who say it is a good time to buy a home increased eight percentage points from last month.
The percentage of consumers who answered that now is a good time to sell a home increased from 55 percent to 61 percent, while the percentage who say it’s a bad time to sell decreased from 35 percent to 28 percent. As a result, the net share of those who say now is a good time to sell increased 13 percentage points in March.
Those who said home prices will go up over the next 12 months increased from 47 percent to 50 percent, while the consumers who said home prices will go down decreased from 18 percent to 14 percent. The share who think home prices will stay the same remained unchanged at 29 percent. Therefore, the net share of Americans who say home prices will go up increased 7 percentage points month over month.
Currently, home prices are growing at their fastest rate since 2006, according to the latest CoreLogic Home Price Index report. Home prices increased 10.4 percent in February 2021 from the previous year, and 1.2 percent from the previous month.
Americans who said mortgage rates will go down in the next 12 months decreased from 8 percent to just 6 percent, while the percentage who expect mortgage rates to go up increased from 47 percent to 54 percent. The share who think mortgage rates will stay the same decreased from 38 percent to 34 percent. As a result, the net share of consumers who say mortgage rates will go down over the next 12 months decreased nine percentage points from February to March.
Freddie Mac’s latest weekly rate survey showed that for the week ending April 1, mortgage rates continued to rise, with the 30-year fixed rate mortgage averaging 3.18 percent.
Those who said they are not concerned about losing their job in the next 12 months remained unchanged at 82 percent, and the percentage who say they are concerned also remained unchanged at 17 percent. As a result, the net share of Americans who say they are not concerned about losing their job remained unchanged month over month.
In March, the real estate industry alone added 10,000 jobs, while the economy as a whole added 916,000 jobs. The unemployment rate declined slightly to 6 percent from 6.2 percent in February to a total of 9.7 million unemployed persons.
The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 17 percent to 25 percent, while the percentage who say their household income is significantly lower decreased from 19 percent to 15 percent. The percentage who say their household income is about the same decreased from 61 percent to 56 percent. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 12 percentage points in March.