September 8, 2015
Home Sweet Home takes on a whole new meaning with Fannie Mae’s new Home Purchase Sentiment Index. The index
distills results from its consumer-focused National Housing Survey™ (NHS) into a single, monthly, predictive indicator. Reflecting more than four years of data, the HPSI is designed to provide distinct signals about the direction of the housing market, helping industry participants to make better informed business decisions.
The press release continues,
Unlike existing general indices of consumer economic sentiment, the HPSI is devoted entirely to housing. The index is constructed from answers to six key NHS questions that solicit Americans’ evaluations of housing market conditions and address topics related to their home purchase decisions. These questions ask consumers whether they think it is a good or bad time to buy or to sell a house, the direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.
The six questions incorporated in the Home Purchase Sentiment Index are
- In general, do you think this is a very good time to buy a house, a somewhat good time, a somewhat bad time, or a very bad time to buy a house?
- In general, do you think this is a very good time to sell a house, a somewhat good time, a somewhat bad time, or a very bad time to buy a house?
- During the next 12 months, do you think home prices in general will go up, go down, or stay the same as where they are now?
- During the next 12 months, do you think home mortgage interest rates will go up, go down, or stay the same as where they are now?
- How concerned are you that you will lose your job in the next twelve months? Are you very concerned, somewhat concerned, not very concerned, or not at all concerned that you will lose your job in the next twelve months?
- How does your current monthly household income compare to what it was twelve months ago?
I am not familiar with the research regarding the validity of consumer economic sentiment indices, but it seems helpful to add a specific home purchase sentiment tool to the toolbox. Future research should determine how this index tracks relevant economic measures and the extent to which it lags or leads those measures. Researchers can find more about the index on the Fannie Mae Consumer Attitude Measures page.| Permalink