Consumer attitudes about the housing market showed marked improvement last month, strengthening the case for a lift in housing activity this year, according to results from Fannie Mae’s May 2015 National Housing Survey™. In line with the positive May jobs report—which showed an acceleration in average hourly earnings—and reflecting recent trends of firming personal income growth, the share of survey respondents reporting a significant increase in their household income climbed 4 percentage points to a near all-time high. As job growth appears to be driving meaningful income growth, the outlook for housing market growth also is improving. Among those surveyed, the share who believe now is a good time to sell a home continued its steady climb, reaching an all-time survey high in May—six percentage points higher than at the same time last year. Additionally, those saying they would prefer to buy rather than rent a home on their next move increased another three percentage points to 66 percent.
“Things are looking up for housing,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “Those saying it is a good time to sell a house hit a survey high of 49 percent. Also, the percentage of consumers telling us their household income is significantly higher than 12 months ago grew six percentage points to 28 percent over the past two months. We have found that these two indicators – good time to sell and income growth – are key drivers for the performance of the housing market and play an important role in our soon to be released Home Purchase Sentiment Index™ (HPSI). The increase in these indicators suggests our forecast of moderate improvement in the housing market in 2015 is on course and mirrors the near-term performance of other leading market data, including mortgage applications and pending home sales.”
Homeownership and Renting
- The average 12-month home price change expectation remained at 2.8 percent.
- The share of respondents who say home prices will go up in the next 12 months rose to 49 percent. The share who say home prices will go down fell to 6 percent.
- The share of respondents who say mortgage rates will go up in the next 12 months fell to 47 percent.
- Those who say it is a good time to buy a house rose back up to 66 percent, while those who say it is a good time to sell went up 3 percentage points to 49 percent – a new survey high.
- The average 12-month rental price change expectation rose to 4.3 percent.
- The percentage of respondents who expect home rental prices to go up rose to 55 percent.
- Those who think it would be easy to get a home mortgage decreased by 2 percentage points to 50 percent, while those who think it would be difficult remained at 46 percent.
- The share who say they would buy if they were going to move rose 3 percentage points to 66 percent, while the share who would rent fell to 27 percent.
The Economy and Household Finances
- The share of respondents who say the economy is on the right track decreased by 4 percentage points to 38 percent, while those who say the economy is on the wrong track rose by 3 percentage points to 52 percent.
- The percentage of respondents who expect their personal financial situation to get worse over the next 12 months rose to 12 percent.
- The share of respondents who say their household income is significantly higher than it was 12 months ago rose 4 percentage points to 28 percent.
- The percentage of respondents say their household expenses are significantly higher than they were 12 months ago increased to 31 percent.
For more information, visit www.fanniemae.com.