After dropping in October from what had been an all-time high the previous month, Fannie Mae's Home Purchase Sentiment Index (HPSI) resumed its upward trek, increasing by 2.6 points in November to 87.8, Strong responses to questions in the National Housing Survey (NHS) to questions about whether it was a good time to buy a home and expectations for home prices were the primary drivers of the index gains.

The survey is based on six of more than a hundred questions asked in the monthly NHS survey.  Four of the six components gained ground in November.

The net share of respondents who said now is a good time to buy a home increased 7 percentage points to 29, erasing the previous month's 6-point drop. The net remains down 1 percentage point compared to the same period last year.  The net share who view it as a good time to sell rose 4 points to 34 and is now 21 percentage points higher than last November.  There was a greater sense of job security in November, with the net share who say they are not concerned about losing their job increasing 4 percentage points to 74 percent.

The net share who said home prices will go up in the next 12 months increased 6 percentage points in November.  Although the questions are not a component of the index, respondents were asked to quantify the expected home price appreciation as well projected rental gains.  Both shot up significantly.  The anticipated increase in home prices over the next year increased from 4.4 percent in October to 4.9 percent while respondents revised their forecast for rent increases from 2.3 percent to 3.7 percent.

The two index components that did not increase were the net share of consumers who reported that their income is significantly higher than it was 12 months ago which was unchanged at 14 percent, and the net who expect mortgage rates to go down over the next 12 months which fell 5 points to a negative 51 percent.

"In November, the HPSI rebounded to near its all-time high, returning the index to its gradual upward trend and suggesting fairly stable consumer home-buying attitudes," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "These results are consistent with our expectation that the housing market will continue its modest expansion going forward. Next month's survey should offer the public a first look at the influence that potential tax reform may have on consumers' views toward housing and the broader economy."

The NHS, from which the Index is constructed, is conducted monthly by telephone among 1,000 consumers, both homeowners and renters.  Respondents are asked more than 100 questions to track attitudinal shifts.