Positive sentiment on housing could be tested by tax reform

While consumer optimism about the nation's housing market returned to near-record levels in November, it could be tested in December as they digest the impact of tax reform.

Fannie Mae's Home Purchase Sentiment Index increased by 2.6 points in November from the previous month to 87.8. This is just shy of its all-time high of 88.3, set on three occasions earlier this year. The HPSI for November 2016 was 81.2.

The index resumed "its gradual upward trend … suggesting fairly stable consumer home-buying attitudes," said Fannie Mae Chief Economist Doug Duncan in a press release. "These results are consistent with our expectation that the housing market will continue its modest expansion going forward."

The National Housing Survey, which Fannie Mae uses to construct the index, was conducted between Nov. 1 and Nov. 20, before the U.S. Senate passed its own version of a tax reform bill. "Next month's survey should offer the public a first look at the influence that potential tax reform may have on consumers' views toward housing and the broader economy," Duncan said.

The net share of respondents that said it was a good time to buy a home increased seven percentage points to 29%, reversing a drop of six percentage points in October's survey.

But the net share of those that stated November was a good time to sell also increased by four percentage points to 34%. That is an increase of 21 percentage points over the 13% net share in November 2016.

There was a six percentage point rise in the net share of Americans that believe prices will increase over the next 12 months, to 46%.