Fannie housing index shows renewed confidence

Fannie Mae's Home Purchase Sentiment Index reversed a 5-month slide in Jan, climbing two points. The index is 1.2 points higher than this time last year, which may bode well for spring home buying.

The rise mirrors increases in other measures of consumer confidence, which recently hit post-recession highs. In the Fannie survey, I think the most interesting result was the five-point rise in the net share of consumers reporting significantly higher income in the last year. A higher percentage also expects their financial situation to improve in the coming year. Given the growing concern about home affordability, if consumers are feeling more flush, it may abate some of this concern.

One dramatic result of the survey was the share who expects home prices to rise in the next year, which increased 7 points. This probably reflects growing concerns about home affordability, but interestingly, it runs counter to the recent hard data, which shows home prices moderating. If home prices continue to moderate, it might give you an opportunity to present prospective homebuyers with this contrarian news that would come as a welcome surprise.

Finally, the share who said now is a good time to sell rose two points, while the share saying it's a good time to buy fell three points. I suspect this, too, reflects concerns about affordability.

Fannie's housing survey reflects the attitudes of 1000 consumers about the housing market and the economy. Fannie has conducted the survey each month since June 2010. Click here for the survey results.