Americans More Upbeat about Housing than Overall Economy

BY JANN SWANSON

Americans currently appear to be more optimistic about the housing market than they are about the economy in general. Fannie Mae’s June 2012 National Housing Survey indicates that flattening economic trends may be dampening consumer expectations about their personal financial situation but their sentiments about housing remain “buoyed” by low house prices and interest rates.

Thirty-five percent of survey participants expect home prices to increase over the next year, up from 28 percent at the beginning of the year and the highest figure since the survey began in 2010.  Those who expect increases are looking for an average rise in prices of 2 percent, also the largest percentage increase in survey history.

Attitudes about mortgages are also upbeat.  Forty-nine percent of respondents expect mortgage rates to stay at current low rates for the next year, up from 47 percent in May while 37 percent expect rates to rise, down from 41 percent.

Overall 73 percent of those surveyed view this as a good time to buy a home, a number that has varied little over the last year.  Fifteen percent think it is a good time to sell a home, a number that has not changed in the last three months but is 5 percentage points higher than in January.  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, the right-track/wrong-track view of the economy is now at 36 percent and 57 percent compared to 38 percent and 56 percent in May.

“While consumers remain cautious about the general economy, their attitudes toward the housing market continue to improve,” said 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.”

There was a dip in responders’ perceptions of household income with 65 percent saying their income was about the same (up from 61 percent) while only 18 percent saw it as improved over the previous 12 months compared to 22 percent in May.  There was an increase however in optimism for the future.  Forty-two percent expect no improvement over the upcoming 12 months, down from 46 percent, while 43 percent expect their financial situation to improve, up one percentage point.

Respondents indicated less certainty about rental price increases in June that in July.  Forty-eight percent expect rental prices to increase over the next 12 months, down from 49 percent and the average increase expected is 4.0 percent, one basis point lower than in the previous month.  Five percent expect rent decreases, up from 4 percent in May. Those who said they would chose to rent if they moved dropped to 27 percent from 32 percent.

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