U.S. Home Purchase Sentiment in September 2025: Flat Confidence Amid Modest Rate Relief

The Fannie Mae Home Purchase Sentiment Index (HPSI) remained unchanged at 71.4 in September 2025, marking a period of stability after recent volatility. Year-over-year, the index is down 2.5 points, indicating a gradual erosion in consumer optimism compared to the previous year. The HPSI, which tracks six key components of housing sentiment, provides a comprehensive snapshot of how Americans perceive the current and future state of the housing market. Despite a modest decline in mortgage rates, consumer sentiment has not improved significantly, as affordability concerns and economic uncertainty persist.

The September 2025 HPSI components reveal a mixed picture of consumer attitudes. The share of respondents who believe it is a good time to buy a home fell slightly to 27%, while those who see it as a bad time to buy rose to 73%. Selling conditions remained flat, with over 81% of homeowners still locked into mortgage rates below 6%, limiting seller motivation. Home price expectations were steady, with 22% of respondents expecting prices to decline over the next 12 months. Mortgage rate outlook was less optimistic, as 30% of respondents anticipate rates will rise, up from 26% in August. Job security concerns eased slightly, with 25% of employed respondents worried about job loss, down from 27% in August. However, income growth remains subdued, with only 14% reporting higher household income compared to 12 months ago, down from 17% in August. Optimism about personal finances also dipped, with 32% expecting improvement over the next 12 months, compared to 33% in August.

The broader economic context continues to shape housing sentiment. Mortgage rates edged toward the lower 6% range in September, following the Federal Reserve's first policy rate cut since December 2024. However, inflation (CPI) remains elevated, and wage growth has not kept pace with home price increases, leading to a sharp decline in buying power nationwide. Employment data shows a slight improvement in job security, but unemployment remains elevated compared to pre-pandemic levels. Housing supply remains tight, with inventory levels below historical averages, further constraining affordability. These factors collectively contribute to the muted consumer sentiment reflected in the HPSI.

Comparing the HPSI with other housing market indicators provides additional insights. The Case-Shiller Home Price Index and FHFA HPI both show continued home price growth, albeit at a slower pace than in previous years. This suggests that while consumer sentiment is cautious, actual market performance remains relatively strong. The divergence between sentiment and market performance may be due to the limited supply of homes for sale and the concentration of homeowners with low mortgage rates, which restricts turnover and keeps prices elevated.

The current trends in consumer sentiment and economic conditions are likely to impact future housing market outcomes. Buyer behavior is expected to remain cautious, with limited improvement in purchase activity unless there are substantial increases in wages and overall financial stability. Home prices may continue to rise, but at a slower pace, as affordability constraints limit demand. Inventory levels are likely to remain tight, further constraining the market. Affordability will remain a key challenge, particularly for first-time buyers and those without access to low mortgage rates.