Fannie Mae Home Purchase Sentiment Index
The Fannie Mae Home Purchase Sentiment Index® (HPSI) is a key indicator of consumer sentiment in the housing market. Derived from Fannie Mae’s National Housing Survey®, the HPSI condenses consumer opinions on housing market conditions, making it a vital tool for anyone interested in real estate trends.
Fannie Mae Home Purchase Sentiment Index: Insights into Housing Market Trends for May 2025
The housing market is a dynamic landscape, shaped by consumer confidence and economic perceptions. The Fannie Mae Home Purchase Sentiment Index (HPSI) offers a window into how Americans view home buying and selling, providing valuable data for understanding market trends. In May 2025, the HPSI reached 73.5, reflecting a cautious yet slightly optimistic outlook among respondents. This article dives into the detailed data from the HPSI, exploring key indicators such as perceptions of buying and selling conditions, home price expectations, mortgage rate forecasts, and preferences for buying versus renting, based on comprehensive data from Fannie Mae’s monthly surveys.
The HPSI for May 2025, at 73.5, marks an increase from April’s 69.2 and is slightly above the 2024 yearly average of 72.5. Historically, the HPSI has fluctuated significantly, peaking at 93.8 in August 2019 and dropping to a low of 56.7 in October 2022. The index’s rise in 2025 suggests a gradual recovery in consumer confidence compared to the challenges faced in 2022 and 2023, when high mortgage rates and economic uncertainty dampened sentiment. The May 2025 figure indicates that while optimism is growing, many Americans remain hesitant about entering the housing market, influenced by factors like affordability and interest rate expectations.
One of the core components of the HPSI is the perception of whether it’s a good or bad time to buy a home. In May 2025, 26% of respondents said it was a good time to buy, up from 23% in April and a significant improvement from the 14% low in May 2023. Conversely, 74% believed it was a bad time to buy, down from 77% in April but still reflecting widespread caution. This sentiment aligns with historical trends, where the “good time to buy” percentage was highest in 2013 (averaging 70%) and lowest in 2022 (averaging 20%). The slight uptick in May 2025 suggests that some barriers, such as high home prices or borrowing costs, may be easing, though affordability remains a concern for many.
On the selling side, 61% of respondents in May 2025 viewed it as a good time to sell, while 38% considered it a bad time. This represents a modest decline from April’s 58% “good time to sell” figure but is consistent with 2024’s average of 65%. The perception of favorable selling conditions has improved significantly since 2011, when only 11% of respondents saw it as a good time to sell, compared to 86% who viewed it as a bad time. The current data indicates a seller’s market, where homeowners feel confident about achieving strong sale prices, likely driven by persistent demand and limited housing inventory.
Expectations about home price movements are another critical aspect of the HPSI. In May 2025, 45% of respondents anticipated that home prices would rise over the next 12 months, while 21% expected prices to fall, and 34% predicted they would stay the same. This results in a net 24% who believe prices will go up, a notable shift from the negative net percentages seen in early 2023, when more respondents expected price declines. The average home price change expectation for May 2025 was a modest 0.31%, down from 0.37% in April, suggesting tempered optimism about price growth. This aligns with the perception that while home values remain elevated, the rapid price surges of 2020–2021 may be moderating.
Mortgage rate expectations also play a significant role in shaping housing sentiment. In May 2025, 32% of respondents expected mortgage rates to increase over the next year, 29% anticipated a decrease, and 38% believed rates would remain stable, yielding a net 3% expecting rates to rise. This is a shift from April’s net -8%, indicating growing concern about potential rate hikes. Historically, mortgage rate expectations have varied, with 2022 seeing a peak in respondents anticipating rate increases due to Federal Reserve actions. The current data suggests uncertainty, as respondents weigh the possibility of rate changes against economic conditions.
Job security is another factor influencing housing decisions. Among employed respondents in May 2025, 19% expressed concern about losing their job, while 78% were not concerned, resulting in a net 59% feeling secure. This is a slight improvement from April’s net 56% and reflects a relatively stable labor market. Compared to 2011, when job concerns were higher, the current figures indicate stronger confidence in employment stability, which supports willingness to engage in major financial commitments like home purchases.
Household income perceptions provide additional context. In May 2025, 19% of respondents reported that their household income was higher than 12 months prior, 10% said it was lower, and 70% indicated it was about the same, yielding a net 9% reporting higher income. This is a positive shift from April’s net 7% and contrasts with 2023, when income growth was more stagnant. Rising incomes, even if modest, can bolster confidence in affording homeownership, though high home prices and borrowing costs remain hurdles.
When considering moving, 68% of respondents in May 2025 said they would buy a home, while 31% would rent. This preference for buying has remained relatively stable, with 2024 averaging 66% for buying and 32% for renting. Historically, the inclination to buy was highest in 2013 (averaging 66%) and dipped in 2020 during economic uncertainty. The current data suggests that despite affordability challenges, homeownership remains a priority for many, though renting is a viable option for a significant minority.
The HPSI also captures broader economic sentiment. In May 2025, 34% of respondents believed the economy was on the right track, while 64% felt it was on the wrong track, resulting in a net -30%. This is a slight improvement from April’s net -36% but reflects ongoing pessimism about economic conditions. Additionally, 42% expected their personal financial situation to improve over the next year, 24% anticipated it would worsen, and 41% expected it to stay the same, yielding a net 18% expecting improvement. These figures highlight a mixed outlook, with personal optimism tempered by broader economic concerns.
In summary, the Fannie Mae HPSI for May 2025 paints a picture of a housing market where cautious optimism is emerging. With 26% viewing it as a good time to buy and 61% seeing favorable selling conditions, consumer sentiment is improving, though high home prices and mortgage rate uncertainty continue to pose challenges. Expectations of modest home price growth, stable employment, and slight income gains support a gradual recovery in confidence. As the market evolves, the HPSI remains a critical tool for understanding consumer attitudes and their implications for housing trends.
FAQ Section
1. What is the Fannie Mae Home Purchase Sentiment Index (HPSI)?
The Fannie Mae Home Purchase Sentiment Index (HPSI) is a monthly survey-based index that measures consumer confidence in the U.S. housing market. It aggregates responses to six key questions about whether it’s a good time to buy or sell a home, expectations for home prices and mortgage rates, job security, and household income changes. In May 2025, the HPSI reached 73.5, up from 69.2 in April, reflecting a slight increase in optimism. The index provides a comprehensive view of market sentiment, helping stakeholders like real estate professionals, policymakers, and homebuyers gauge trends. For example, the HPSI’s historical range—from 56.7 in October 2022 to 93.8 in August 2019—illustrates how sentiment shifts with economic conditions, making it a reliable indicator for forecasting housing activity.
2. How does the HPSI reflect consumer confidence in home buying?
The HPSI reflects consumer confidence in home buying through its “good time to buy” metric, which asks respondents if current conditions favor purchasing a home. In May 2025, 26% of respondents said it was a good time to buy, while 74% viewed it as a bad time, resulting in a net -48%. This is an improvement from April 2025’s net -54% and a significant shift from the 2022 average of -55%, when high mortgage rates deterred buyers. The data suggests that while affordability challenges persist, factors like stabilizing rates or improving economic perceptions may be boosting confidence. Historically, the highest confidence was in 2013 (70% average), indicating that current sentiment remains cautious but is trending upward.
3. Why do more people think it’s a good time to sell than to buy?
The HPSI data shows that in May 2025, 61% of respondents believed it was a good time to sell, compared to only 26% for buying, due to market dynamics favoring sellers. Low housing inventory and sustained demand have kept home prices elevated, benefiting sellers who can command strong prices. The net “good time to sell” percentage was 23% in May 2025, contrasting with the net -48% for buying. This gap has been consistent since 2020, when seller confidence surged (averaging 50%) while buyer sentiment waned due to rising costs. The data reflects a seller’s market, where homeowners perceive favorable conditions, while buyers face hurdles like high prices and mortgage rates.
4. How do mortgage rate expectations impact the housing market?
Mortgage rate expectations, as captured by the HPSI, significantly influence housing market behavior. In May 2025, 32% of respondents expected rates to rise, 29% to fall, and 38% to stay the same, yielding a net 3% anticipating increases. This shift from April’s net -8% suggests growing concern about borrowing costs, which can reduce affordability and deter purchases. Historically, 2022 saw a peak in rate hike expectations, aligning with Federal Reserve actions, which cooled the market. When respondents anticipate lower rates, as in 2020, buying activity often rises. The current uncertainty in May 2025 indicates that rate expectations are a critical factor shaping buyer and seller decisions.
5. What does the HPSI say about home price expectations?
The HPSI tracks home price expectations, revealing consumer predictions for the next 12 months. In May 2025, 45% of respondents expected home prices to rise, 21% to fall, and 34% to remain stable, resulting in a net 24% anticipating price increases. The average expected price change was 0.31%, down from 0.37% in April, suggesting modest growth forecasts. This contrasts with 2023, when negative net percentages reflected pessimism, and 2020–2021, when rapid price growth fueled higher expectations. The data indicates that while prices are expected to rise, the pace may slow, influencing affordability and market activity.
