Americans' desire to be homebuyers decreased for the fifth consecutive month in December as interest rates continued their post-election climb, according to Fannie Mae.
Fannie Mae's Home Purchase Sentiment Index declined by 0.5 percentage points month over month and 2.5 percentage points from a year earlier to 80.7. At the component level, though, it was more of a mixed bag.
The net percentage of Americans who said mortgage rates will drop over the next year fell by four percentage points to 68%, and the net share of Americans who reported that their household income is significantly higher than a year ago dipped five percentage points to 10%.
Meanwhile, the net share of Americans who say it is a good time to buy a house rose by two percentage points to 32%, and the net percentage of Americans who are not concerned about losing their job increased four percentage points to 68%.
The share of those who say that home prices will go up stayed put at 35%. Similarly, the net percentage of those who say it is a good time to sell was unchanged from the prior month at 13%, and the share of those who think it is a bad time to sell also remained the same as in November at 38%.
Optimism on the part of consumers in the wake of the election is unsurprising, but could be fleeting, said Fannie Mae Chief Economist Doug Duncan.
"A spike in economic optimism in the immediate aftermath of an election is typical," Duncan said. "Whether consumers will sustain this level of optimism into 2017 remains unclear."
Duncan noted that the higher interest rates are a reflection of "the market's anticipation of pro-growth policies from the incoming administration."
"If this optimism comes to fruition, it should translate into stronger income growth and increased job security for consumers — the two HPSI components that could help support housing sentiment this year," Duncan added.
