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Housing Recovery Remains on Firm Footing as Americans’ Housing Sentiment Bounces Back from an Autumn Dip

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By Pete Bakel

Year-over-year gains in Americans’ attitudes toward homeownership demonstrate that the housing recovery continues to move forward on firm footing despite a drop in housing sentiment during the fall, according to Fannie Mae’s December National Housing Survey results. Forty-nine percent of consumers surveyed believe home prices will go up over the next 12 months, compared to 43 percent in December 2012. Consumers’ average 12-month home prices expectations moved to 3.2 percent, up from 2.6 percent last year. Those who say it’s a good time to sell a home rose significantly to 33 percent from 21 percent in December 2012. And, despite a higher mortgage interest rate environment, consumers are more optimistic about their access to mortgage credit than they were a year ago, with those who say that it would be easy to get a home mortgage today rising to 50 percent, compared to 45 percent last year.

“The marked improvement in housing market sentiment over the course of 2013 bore out our view going into the year that the housing recovery was on a firm footing. Year-over-year gains in home price expectations and attitudes about the current selling environment were particularly notable,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “Going into 2014, housing attitudes are recovering from a recent dip that coincided with the heated fiscal discussions between the Administration and Congress late last year. Consumer attitudes about the ease of getting a mortgage today are at their highest level in the survey’s three-and-a-half-year history, which should help offset the current higher interest rate environment and support a continued but measured housing recovery as we move through 2014.”

Homeownership and Renting

• At 3.2 percent, the average 12-month home price change expectation increased since last month.
• The share of respondents who say home prices will go up in the next 12 months increased to 49 percent.
• The share of respondents who say mortgage rates will go up in the next 12 months decreased slightly to 57 percent.
• Those who say it is a good time to buy a house increased from last month, up three percentage points to 67 percent.
• The average 12-month rental price change expectation increased from last month to 3.8 percent.
• Fifty-three percent of those surveyed says home rental prices will go up in the next 12 months, a three percentage point increase over last month.
• Fifty percent of respondents thought it would be easy for them to get a home mortgage today, holding steady from last month.
• The share of respondents who says they would buy if they were going to move fell slightly to 66 percent.

The Economy and Household Finances

• The share of respondents who say the economy is on the right track fell slightly from last month to 31 percent, remaining low compared to earlier in the year.
• The percentage of respondents who expect their personal financial situation to get better in the next 12 months increased four percentage points to 42 percent.
• The share of respondents who say their household income is significantly higher than it was 12 months ago increased slightly to 23 percent.
• At 30 percent, the share of respondents who say their household expenses are significantly higher than they were 12 months ago fell three percentage points from last month.

One of the most detailed consumer attitudinal surveys of its kind, the Fannie Mae National Housing Survey polled 1,005 Americans via live telephone interview 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. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts (findings are compared to the same survey conducted monthly beginning June 2010). Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future.

For more information, visit http://www.fanniemae.com/progress.

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