Americans' Outlook on Housing Continues to Improve Despite Dip in Overall Economic Confidence
Consumer sentiment regarding the housing market continues its modestly positive trend, according to results from Fannie Mae's August 2012 National Housing Survey. Supported by the expectation that home prices will rise in the next year and more saying it is a good time to sell, Americans have maintained a cautious but improving view of the housing market and homeownership. However, their stalling household financial expectations and declining economic optimism will likely mean the rate at which the housing market recovers will remain tempered.
"Consumer attitudes toward the housing market remain modestly positive, despite signs of increased concern over the direction of the economy," said Doug Duncan, senior vice president and chief economist of Fannie Mae. "While the latest results showed a pickup in the share of consumers expecting mortgage rates to rise, reflecting the uptrend of long-term interest rates since mid-July, that may soon change."
Survey respondents expect home prices to increase 1.6% in the next year, on average, down slightly from the high of 2.0% seen in the June results. The number of respondents who say home prices will decline totaled 11%, the lowest level since the survey began in June 2010. Eighteen percent say now is a good time to sell, marking the highest level since the survey's inception. Regarding to mortgage rates, 40% of those surveyed expect a rise in the next 12 months, an increase of 4 percentage points over July.
Meanwhile, the survey showed increasing consumer pessimism about the direction of the overall economy. The number of respondents who believe the economy is headed in the wrong direction ticked up 2 percentage points to 60%, the third consecutive rise to the highest reading since January. Those who expect their financial situation to worsen dipped to 13% while those expecting their situation to remain the same increased modestly to 41%.
SURVEY HIGHLIGHTS — HOME OWNERSHIP AND RENTING
- Eleven percent of those surveyed say home prices will go down in the next year, holding steady at the lowest level since the survey's inception in June 2010.
- At 40%, the percentage of respondents who say mortgage rates will go up in the next 12 months has increased by 4 percentage points since July.
- Eighteen percent of respondents say it is a good time to sell, the highest level since the survey's inception.
- The percentage of respondents who say it is a good time to buy has remained steady at 73%.
- Forty-four percent of those surveyed say home rental prices will go up in the next year, a decrease of 3 percentage points, while 5% expect them to go down.
- The percentage of respondents who say they would buy if they were going to move increased slightly to 67%, while 28% would rent.
THE ECONOMY AND HOUSEHOLD FINANCES
- Consumer optimism continues to wane, with 33% saying the economy is on the right track, a slight decrease from last month and 5 percentage points lower than the May 2012 peak.
- The percentage of respondents who expect their personal financial situation to get worse fell slightly to 13%, while those expecting their personal financial situation to stay the same increased slightly to 41%.
- The share of respondents who say their household income is significantly higher than it was 12 months ago remained steady at 20%, while those who say it is significantly lower increased slightly to 16%.
- Fifty-six percent of those surveyed say their household expenses are about the same as they were a year ago, a slight decrease over July.