Housing Attitudes Reverse Course in Fannie Mae Survey

News

Negativity was pervasive in the results of Fannie Mae’s July
National Housing Survey (NHS). 
Respondents indicated falling expectations about the economy, housing,
and their own personal financial situation. 
They did however feel that home prices would continue to rise – which could
be either positive or negative depending on the perspective – as well as interest
rates.

After climbing fairly steadily earlier in the year, July saw
a huge 7 percentage point drop in the percentage of respondents who believe now
is a good time to sell a house. Those who believe
it is a good time to buy dropped to 61 percent-an all-time survey low.

 

 

Forty-nine percent of
respondents expect home prices to increase over the next 12 months, 2
percentage points more than in June, with an average expectation of a 3 percent
gain.  Just over half of respondents
expect mortgages rates to go up over the next year, an uptick of 1 point.  Those who feel it would be difficult for them
to obtain a mortgage rose from 46 to 49 percent with a slightly smaller
correspondent fall in those who expect no problems.  It was the first survey since October in
which more respondents expected a difficult time with financing than did not.

 

 

“Consumer attitudes toward housing slid
back
this month,” said Doug Duncan, senior vice president and chief economist
at Fannie Mae. “The share of consumers who think it’s a good time to sell a
home posted a sizable decrease from a record high in the prior month, even as
home price change expectations strengthened. Deteriorating consumer assessments
of income growth over the past year as well as increased caution around the
direction of the economy and personal financial expectations may be
contributing to the pullback in sentiment. Still, it is premature to read too
much into this month’s results as the survey was taken around the time of
increased global turmoil, including Greece’s potential default and China’s
stock market plunge, which has receded somewhat. Most of our key indicators are
as strong or stronger than they were at this time last year, which is
indicative of an improving housing market this year.”

The share of
consumers saying the economy is on the wrong track rose by 3 percentage points
to 54 percent in July.  This lagging
confidence in the economy may be behind a 5 percentage point drop in those who
think rents will continue to increase over the next year.  The 54 percent who do expect increases have
raised their expectations slightly, from 4.2 to 4.5 percent.

 

 

Those who expect
their personal financial situation to improve over the next year fell to 44
percent, while those reporting a significantly lower income compared to 12
months ago increased to 15 percent-marking the first change in this indicator
in three months.  Those who say their
household expenses are significantly higher than they were 12 months ago
remained at 31 percent.

The Fannie Mae survey polls 1,000
Americans by phone each month. 
Respondents include both homeowners and renters and the more than 100
questions asked are designed to assess attitudes toward owning and renting a
home, home and rental price changes, homeownership distress, the economy,
household finances, and overall consumer confidence. The survey has been
conducted monthly since June 2010.

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