Fannie Mae's Home Purchase Sentiment Index increased 2.4 points to 83.2 in December, capping off its strongest year thus far, as Americans' household income prospects bounced back to levels of three months ago. The share of consumers who reported that their income was significantly higher than it was 12 months ago climbed 9 percentage points on net in December, while those who were unconcerned about losing their job rose 3 percentage points on net. Coupled with an improved financial outlook, more consumers said they believe now is a good time to sell a home – climbing 4 percentage points on net – although the share who believe now is a good time to buy remained flat in December.

"Consumers ended the year on an improved note with regard to their income, job security, and overall economic outlook. This more positive consumer sentiment brought the HPSI up a few points, moving the index up for all of 2015," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Brightening economic prospects, if sustained, should stimulate demand for homeownership. However, continuing upward pressure on rental prices and constrained housing supply, particularly for starter homes, may mean prospective first-time homebuyers could face affordability constraints."

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS
Fannie Mae's December 2015 Home Purchase Sentiment Index rose 2.4 percentage points in December to 83.2. Overall, consumer sentiment about personal finances and the direction of the economy has improved since last month. Four of the six HPSI components increased in December: Household Income, Good Time to Sell, Job Security, and Home Prices. Mortgage Rate net expectations fell by 4 points, while the net share of respondents who said it is a Good Time to Buy remained at 35 percent. Overall, the HPSI is up 1.9 points since this time last year.

• The net share of respondents who say that it is a good time to buy a house remained flat at 35%.

• The net percentage of respondents who say it is a good time to sell a house rose after falling for two months in a row – rising 4 percentage points to 8% in December.

• The net share of respondents who say that home prices will go up rose 2 percentage points to 40%.

• The net share of those who say mortgage interest rates will go down continued to decrease, dropping 4 percentage points to negative 52%.

• The net share of respondents who say they are not concerned with losing their job rose 3 percentage points to 72%. 85% of respondents say they are not concerned about losing their job, tying an all-time survey high.

• The net share of respondents who say their household income is significantly higher than it was 12 months ago rose 9 percentage points to 15%.