According to the GSE’s report, sentiment ticked up by 0.1 point to 93.8 in August. Not only is this up 5.8 points from last year’s rate, but it also marks a new survey high.
Despite this annual increase, the report indicates that a majority of its components either declined or remained relatively flat during the month.
However, the only component to increase in August, which was the index that measures whether or not mortgage rates will go down, edged up 11 percentage points to -17%.
“Growing expectations that mortgage rates will remain flat or decline are reflected in the HPSI’s latest reading, which is now at a survey high even though other indicators of economic and housing market sentiment are flat to negative,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Unfortunately, much of the lower interest rate environment can be attributed to global economic uncertainties, which appear to have dampened consumer sentiment regarding the direction of the economy.”
According to Duncan, Fannie Mae does not expect housing market activity to remain relatively stable going forward, but instead anticipates that America’s favorable rate environment will continue to support refinance activity.
Freddie Mac Chief Economist Sam Khater said that mortgage rates continued the summer swoon due to weaker economic data.
“While economic growth is clearly slowing due to rising manufacturing and trade headwinds, economic fundamentals are still solid for U.S. consumers,” Khater said. “The unemployment rate is low, housing affordability is improving, homebuyer demand is rising, and home price growth is stable.”
As homebuyer demand rises, the Mortgage Bankers Association indicates that refinance demand is also growing. According to the organization’s latest Mortgage Applications Survey, August’s refinance volume was more than 150% higher than the same time period in 2018.
NOTE: Fannie Mae’s Home Purchase Sentiment Index is constructed from six questions, gauging the current views and forward-looking expectations of consumers navigating the housing market.