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Housing Survey Shows Consumer Attitudes Demonstrative of Macroeconomic Indicators

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By Pete Bakel

Housing market confidence among Americans continues to trend in a positive direction despite stalling optimism about the economy and personal finances, according to results from Fannie Mae’s June 2012 National Housing Survey. Results indicate flattening economic trends may be contributing to waning consumer expectations about their personal financial situation. Nevertheless, Americans’ continued positive sentiment about housing appears to remain buoyed by low house prices and interest rates at historically low levels.

“While consumers remain cautious about the general economy, their attitudes toward the housing market continue to improve,” says Doug Duncan, senior vice president and chief economist of Fannie Mae. “Although this positive trend may be short-lived if the general economy falters, one might ask whether consumers are increasingly seeing the current environment as a unique opportunity to buy a home while home prices remain depressed, rental costs are increasing, and interest rates are near historic lows.”

Respondents expect home prices to increase 2 percent in the next year, on average, and 35 percent of Americans say that home prices will go up in the next twelve months (also the highest level recorded since the survey began in June 2010). In turn, the share of consumers who say they would buy if they were going to move increased by 6 percentage points this month (the highest level seen in the survey’s two-year history).

At the same time, 36 percent of Americans think the economy is on the right track (down 2 percentage points since May) and 57 percent think the economy is on the wrong track (up 1 percentage point). The percentage of respondents who expect their financial situation to remain the same over the next year dropped by 4 percentage points from last month to 42 percent, while only 18 percent say their household income has improved (also down 4 percentage points).

Survey Highlights

Homeownership and Renting

• Average home price expectation hit 2.0 percent this month, a 0.6 percent increase from May and the highest value recorded since the survey began in June 2010.

• Thirty-five percent of respondents say that home prices will go up in the next 12 months, the highest level recorded since the survey’s inception.

• Thirty-seven percent of those surveyed think mortgage rates will go up in the next 12 months, a 4 percentage point decrease from last month.

• The percentage that say it is a good time to buy increased slightly to 73 percent, matching the highest level recorded since the survey began two years ago, while the percentage who think it is a good time to sell remained at 15 percent.

• On average, respondents expect home rental prices to increase by 4.0 percent over the next 12 months, generally steady since May.

• Forty-eight percent of respondents think that home rental prices will go up in the next 12 months, while 5 percent think they will go down.

• Sixty-nine percent of respondents said that they would buy if they were going to move, a 6 percentage point increase from last month and the highest level recorded since the survey’s inception.

• The percentage of respondents who would rent decreased from 32 percent to 27 percent, the lowest number to date.

The Economy and Household Finances

• The upward trend of confidence that the economy is on the right track stalled this month, leveling at 36 percent.

• The percentage of respondents who expect their personal financial situation to stay the same over the next 12 months decreased by 4 percentage points to 42 percent, while those who expect their situation to get better steadied at 43 percent.

• Eighteen percent of respondents say their household income is significantly higher than it was 12 months ago, a 4 percentage point decrease and the lowest value seen since November 2011.

• Household expenses remained stable this month, with 55 percent reporting that their expenses stayed about the same as they were 12 months ago.

For more information, visit www.fanniemae.com.

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