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News & Press: Industry News

Home Purchase Sentiment Drops but Refinances May Surge

Tuesday, May 19, 2020  
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After falling 11.7 points last month, the Fannie Mae Home Purchase Sentiment Index decreased an additional 17.8 points in April to 63.0, its lowest reading since November 2011. Five of the six HPSI components decreased month over month, as consumers reported a markedly more pessimistic view of homebuying and home selling conditions. Moreover, on net, more consumers reported that their household income is significantly lower today than it was 12 months ago. Year over year, the HPSI is down 25.3 points. Doug Duncan, Senior Vice President and Chief Economist stated that on average, consumers expect home prices to fall 2 percent over the next 12 months, the lowest expected growth rate in survey history but that a much steeper decline in selling sentiment relative to buying sentiment will soften downward pressure on home prices.

Offsetting this decline in home purchase sentiment may be surge in refinancings. Housing Wire reports that mortgage originations for refinancings may hit a seven-year high this quarter as Americans chase some of the lowest home-loan rates ever the lowest home-loan rates ever recorded. Refinance volume probably will total $429 billion, more than double the $180 billion of the year-ago quarter, according to a Fannie Mae forecast.

Keith Gumbinger, a vice president at mortgage research firm HSH Associates, was mentioned in Housing Wire as stating that many homeowners are sitting on an equity cushion after several years of hefty home-price gains that will help them meet stricter standards being imposed by lenders.

California Land Title Association

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