Improving Economic Conditions Support Strong Home Buyer Sentiment

Fannie Mae disclosed Tuesday that its Home Purchase Sentiment Index witnessed a 3.3 point uptick to 86.5 in July, which meant it reached an all-time survey high. The survey suggested more favorable prospects for the housing market.

The interesting point of the survey is that six components of HPSI advanced in July and the biggest increase of 8 percentage points was that consumers expect home prices to advance in the next 12-month period. This came on the heels of a drop in the preceding month.

Another key takeaway from the survey is the 5 percentage point increase in the respondents expecting mortgage interest rates to come down in the same period. Fannie Mae data pointed out that household income component witnessed a rebound following a fall in June growing 3 percentage points to 11 percent.

Wells Fargo economists believe consumers are feeling more secured about their jobs supporting the homebuyer sentiment. They pointed out that estimations for rent also witnessed an increase in July. The economists felt that the rent index was at the elevated levels for quite some time. This compels consumers to go in for home buying.

The performance of housing stocks in July:

SPDR S&P Homebuilders (ETF) (NYSE:XHB) jumped 7.57 percent
D.R.Horton, Inc. (NYSE:DHI) advanced 4.45 percent
PulteGroup, Inc. (NYSE:PHM) climbed 8.67 percent
Toll Brothers Inc (NYSE:TOL) rose 4.09 percent
Taylor Morrison Home Corp (NYSE:TMHC) jumped 9.5 percent
KB Home (NYSE:KBH) advanced 3.22 percent