Americans are feeling much better about
housing than they do about the economy as a whole judging by their responses to
the February National Housing Survey.
The survey, conducted monthly by Fannie Mae found that both homeowners
and renters expect home prices to rise and are increasingly disposed toward
buying a home rather than renting one but are changing little in their
expectations about the economy or their personal finances.
The percentage of respondents who expect
home prices to go up over the next 12 months jumped from 41 percent in the
January survey to 48 percent and those who expect no change in prices fell from
45 percent to 39 percent. Only 10
percent expect further price declines, a number that has remained flat since
Those who expect prices to rise are
looking for larger increases – an average of 2.9 percent over the next 12
months. This is an uptick of 0.5 percent
from responses last month.
Only seven percent of respondents
expect interest rates to decline further, a number that has not changed since December,
while 45 percent expect rates to increase over the next 12 months, an increase
of 4 percentage points from January and the highest level since August 2011.
Twenty-five percent of respondents
say it is a good time to sell a house, the highest level since the survey’s
inception in June 2010 and 73 percent think it is a good time to buy, up from
69 percent. Sixty-seven percent say they
would buy if they were going to move, 2 percentage points more than in January.
Half of respondents expect rentals
to go up over the next 12 months, unchanged from January while expectations for
the amount of the rent hikes rose to 3.9 percent from 3.7 percent.
When asked about the economy or
their own personal finances survey respondents appear in a holding
pattern. While 38 percent say the economy
is on the right track this is well below the peak of 45 percent in November and
has been virtually unchanged over the last three surveys.
The percentage who expect their
personal financial situation to get better over the next 12 months fell by 2 percentage
points to 41 percent and fewer (21 percent compared to 23 percent) say their household
income is significantly higher than it was 12 months ago, a 2 percentage point
decrease. However fewer (31 percent) report
significantly higher household expenses over the same period, a 7 percentage
point decrease and the lowest level since June 2010.
“Despite fiscal headwinds and political
uncertainty, consumer sentiment toward housing is robust and continues to
gather strength,” said Doug Duncan, senior vice president and chief economist
at Fannie Mae. “We expect home prices to firm further amid a durable housing
recovery, gradually reducing the population of underwater borrowers and helping
to boost the share of consumers who say that now is a good time to sell.”
“Since reaching its trough last
September, the share of consumers expecting mortgage rates to rise has trended
up,” continued Duncan. “However, despite historically low mortgage rates,
nearly half of borrowers have never refinanced their mortgage. Combined with
the scheduled year-end HARP deadline, rising rate expectations should prompt
some borrowers to refinance soon to take advantage of more favorable mortgage
terms and add to their disposable income, helping to offset ongoing fiscal
The Fannie Mae National Housing
Survey collected data via phone from 1,008 Americans, both homeowners and
renters, to assess their attitudes toward owning and renting a home, home and
rental price changes, homeownership distress, the economy, household finances,
and overall consumer confidence.