How does Fannie Mae measure housing sentiment? That forecasts which determines home buyers confidence...

  Fannie Mae has been busy keeping up with consumers doing a survey of 1,000 households a month for 4.5 years. They were trying to boil all of that sentiment about housing down into one indicator. To give people a collective view looking forward about how people are feeling about the housing market. So as you have watched over the last 4 years a gradual improvement in the housing index has sort of prefigured that. Back in November 2011 one of the questions they asked, "is it a good time to sell a house if your underwater"? It definitely was not a good time to sell a house! So Fannie Mae saw that portion which is one of the key questions is this jump about 20 points so they pout out their price point sheet.

(Home Purchase Sentiment)

1. Is it a good time to buy?

2. Is it a good time to sell? 

3. Where do you see home prices going?

4. Where do you see mortgage rates going?

Fannie Mae believes housing is now on a firm track it's that kind of thinking forward on. They understand a lot the times consumers take it has a lagging indicator not a leading indicator. Consumers should ask themselves before purchasing a home the following:

1. What do you expect your income to be in 12 months out?

2. Are you concerned about losing your job?

3. Do you anticipate changes in your household income soon?

4. What do you expect interest rates to do 12 months out?

5. What do you expect housing prices to do 12 months out?

6. What has happened to your income in the last 12 months?

  To measure the base from where they are think about it. How confident are you of your employment over the next 12 months? So it's to look forward where as most indicators can lead to backward looking. It can be odd at times to try finding a base number and a base line for the last 4 years how chaotic it's been in the housing industry. It's absolutely true Fannie Mae is telling people to be realistic this is based out of 4 years of data and it's not a full housing cycle. So don't make it the key forecast variable in your forecasting process today. But Fannie Mae compared it to the same set of questions out of the Michigan consumer sentiment survey it actually performs better over the test time period.

  Are home buyers feeling better about it? Significantly up from a year ago it's slowed the last couple of months. When they look at some of the hundreds of questions they've asked in over all surveys the sentiment about the economy as a whole actually has taken a significant down turn in the last 2 months. So Fannie Mae is looking at that as households watching the volatility that's coming back into the market with the Feds making their interest rate move.

It's just seems as though in the last couple of months Americans haven't felt that the economy is headed in the right direction or the country since 2004.