Consumer Sentiment On Housing Improves Despite Broader Economic Concerns


Consumer attitudes toward housing appear
to have stabilized, largely unchanged over the last few months but at levels markedly
higher than last year. Results from Fannie Mae’s National Housing Survey for
August showed that thirty-five percent of survey respondents expect home prices
to rise over the next year, unchanged from June and July, but up from 20
percent in August 2011. 

The percentage of those who expect
further price declines was also unchanged from the two previous months at 11
percent while the percentage of respondents expecting prices to remain stagnant
has remained virtually unchanged, varying between 48 and 50 percent for the
last 12 months.  Among those expecting a
price increase the average bump expected was 1.6 percent

Fannie Mae’s monthly survey involves a
rolling panel of 1,002 respondents representing homeowners with and without
mortgages and renters.  Panel members are
asked 100 questions via a live telephone interview about their attitudes toward
owning and renting a home, mortgage rates, the economy, and their personal

Asked about the health of the
market, 73 percent of respondents felt it was a good time to buy a house, a
number that has remained flat for the last six months and is up only four
points from August 2011.  However, while
the numbers are still small, the percentage of persons who felt it is a good
time to sell has doubled in the same period, climbing from 9 percent last
August to 18 percent in the recent survey.

More people think that the current
mortgage rates are too good to last. 
Higher rates within the next 12 months are now expected by 40 percent,
up from 36 percent in July.

Expectations about rent increases
have eased a bit with 44 percent expecting rents to rise compared to 47 percent
in June.  The percentage expecting rents
to decrease is still negligible but rose from 3 percent in July to 5 percent in
August.  The rent increase expected
decreased to 3.2

The percentage of respondents who
say they would buy if they were going to move increased slightly to 67 percent,
while 28 percent would rent.

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. Friday’s disappointing jobs report underpins the gradual nature of
this year’s housing recovery and supports our view that the muted economic
recovery is still subject to downside risk and that additional Fed easing will
soon be forthcoming.”

Optimism about housing did not
extend to the nation’s economy or the respondent’s personal financial
situation.  Respondents saying the
economy is on the right track declined slightly to 33 percent and is down 5
points from the May peak while the wrong track responses went from 58 percent
to 60.  Despite the waning optimism,
wrong track responses were down 18 points from August 2011 and right track responses
have doubled.

Questions about personal finances
elicited slightly more positive responses since July with 15 percent saying
they thought things would get worse over the next 12 months, a two point drop,
while those who expected no change or improvement were both steady at slightly
over 40 percent.

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