The Home Purchase Sentiment Index: A New Housing Indicator
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We built a home purchase sentiment index (HPSI) with consumers’ responses to questions about home buying and selling conditions, income gains and job concerns, and house price and mortgage rate expectations. The HPSI can help forecast mortgage originations and house prices, sales, and starts. Forecasting horse races during 2012–14 show the HPSI handily outperformed other sentiment indices. We show differences in the HPSI by income and by age groups. We also suggest other aspects of housing where survey-based indicators may help, such as demand by millennials or seniors, home owners’ moving, renters’ intentions, and mortgage refinancing, delinquency, or default rates.
Keywordshousing sentiment forecasting index
The author thanks David Berson, Qiang Cai, Steve Deggendorf, Doug Duncan, James Glassman, Hamilton Fout, Mark Palim, Karen Pence, Shane Sherlund, Dan Van Dyke, Mark Winer, and seminar participants at FHFA, Fannie Mae, and FRB San Francisco for helpful comments. Remaining errors are of the author alone.
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