HousingWireHousingWire
U.S. consumer sentiment toward the housing market improved in May and reached its highest level since November 2024, according to Fannie Mae.
Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose 4.3 points to 73.5 last month, driven by increased optimism about home buying and selling conditions and expectations that mortgage rates may fall in the coming year.
The index remains below pre-pandemic highs but is recovering from an all-time low of 56.7 recorded in October 2022.
Mortgage rate outlook cautious but optimistic
While 29% of consumers said they expect rates to decrease, 38% expect them to remain unchanged. The share of respondents who think rates will rise fell from 36% in April to 32% in May.
Concerns about job security also eased. Only 22% of employed respondents said they were worried about losing their job — down from 25% in April and 32% in March. The net share of consumers not concerned about unemployment rose to 54%.
But views on household income remained mixed. Most respondents (70%) said their income is unchanged from a year ago, while 10% said it had declined significantly. The net share reporting higher income dropped 3 percentage points to 9%.
Although not part of the HPSI, the broader economic outlook also improved slightly. Sixty-four percent of respondents said the economy was on the wrong track in May, compared to 67% in April and 74% in May 2024.
Most buyers remain wary
Despite the overall improvement, most consumers still don’t believe it’s a good time to buy. Only 26% of those surveyed in May said it was a good time to purchase a home — up from 23% in April and 14% a year earlier, which was a survey low.
Meanwhile, the share who said it was a bad time to buy fell to 74%, down 3 percentage points from April.
Sentiment about selling also improved. Sixty-one percent of respondents said May was a good time to sell, up from 58% in April. The percentage who said it was a bad time to sell dropped to 38%.
Expectations about home prices also shifted. Forty-five percent of respondents said they expect prices to rise in the next year while 34% said they would stay the same. The net share of consumers anticipating higher prices rose to 24%, a 3-point gain.
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