What is the housing purchase sentiment index, or what's known as the HPSF? If you analyze market conditions regularly, you've probably come across a statistic that's associated with this survey. But why is it so important in the present market, and how can we use it to our advantage?
Something that came in the wake of the financial crisis was the realization that many market indicators, including those associated with housing, were two financially focused. This created false market indicators, which devalues our ability to predict future market conditions. But human behavior, specifically human sentiment, while difficult to measure, has become critically important. The HPSI, while objective, can provide some good indicators as to how people are reacting to certain market shifts. Let's face it, the housing market is highly human interest involved. Timely detection of shifts in consumer perspectives may be especially valuable for housing and mortgage markets because they involve long-term commitments.
Consumer decisions about whether and when to buy or sell a home inevitably depends on their expectations about future market prices, changes to mortgage rates, their income or income adjustments, and many other personal indicators. So how much can we rely on this survey? HPSI helps forecast home sales, housing starts, and mortgage shifts for the upcoming year. It also forecasts home prices, growth rates and based, again purely on behavioral considerations of buyers and sellers.
Historically, the HCPSI has provided valuable insight in the housing market specific to major adjustments such as those of 2018. If followed properly, it can give those working in the property business a step forward among competitors. The index, while only having a little more than a decade of use. Has been shown to have helped since it started in 2011.
Increases in the HPSI have predicted stronger housing markets and been able to show agents when to more greatly advise sellers and buyers. when evaluated in conjunction with indexes of overall economic consumer sentiment the HCI continues to provide valuable forecasts.