Home purchase sentiment is reaching new highs, according to data released from Fannie Mae.
Fannie Mae reported Monday that the Home Purchase Sentiment Index rose 3.3 points in July to 86.5, an all-time survey high. An increase in the survey indicates a more positive outlook on the housing market based on certain components.
"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," Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a news release.
Of the six components, the largest increase was noted in the net share of consumers who expect higher home prices in the next 12 months, which increased 8 percentage points. Additionally the net share of consumers who expect mortgage rates to decrease over the next year fell by 5 percentage points.
Fannie Mae also reported that the share of consumers who said they would buy if they were to move rose to 67%, while the corresponding share who said they would rent dropped to 26%. The latter represented an all-time survey low, which Duncan said reflects a shift toward buying among younger consumers.
"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," Duncan said. "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."
