Americans are feeling better about the economy according to results from Fannie Mae's December Housing Survey released by the company this morning. Consumer sentiment, while still very low, improved during the last months of 2011 and the number of Americans who say the economy is on the right track has risen 6 percentage points since November. While the number who gave the "wrong track" answer was down 6 percent as well, 69 percent of respondents still feel that the direction of the country is negative against only 22 percent who feel the right course has been set.
The Housing Survey is a telephone poll taken of a rolling panel of homeowners and renters each month to assess their attitudes toward owning and renting a home, mortgage rates, homeownership distress, the economy, household finances, and overall consumer confidence. The current survey, involving 100 questions and 1000 respondents was conducted between December 1, 2011 and December 20, 2011.
When asked about housing, more respondents expected home prices to increase over the next year than did so in November and to increase an average of 0.8 percent. In November the average expectation was for a 0.2 percent uptick. On the personal finance side, for the first time since February 2011 more respondents (40 percent) say their financial situation will get better over the next year than say it will stay the same (39 percent) and the share of consumers who state their income is significantly higher than it was a year ago rose 5 percentage points to 21 percent since the last survey while 59 percent say it has stayed the same, a decrease of 5 points.
According to Doug Duncan, vice president and chief economist for Fannie Mae, "December attitudes have rebounded from the lows seen during the debt ceiling debate and economic deterioration of Europe this past summer. There is marked improvement in consumer sentiment regarding the direction of the economy, personal finances, and future home price expectations. This improvement is in line with the modest fourth-quarter pickup in the U.S. economy. However, while December results show that more Americans think the economy is on the right track, consumer attitudes are still at depressed levels, with more than two-thirds saying that the economy is on the wrong track."
While 52 percent of respondents expect that home prices will not change over the next 12 months, 26 percent are looking for an increase (up 4 points) and 18 percent expect prices to go down (a 4 point decrease).
Nearly three-quarters (71 percent) of respondents feel that this is a good time to buy a home, an increase of 3 points since November but only 11 percent view it as a good time to sell. Thirty-one percent of Americans say they would rent their next home, while 64% say they would buy, a 1 point increase from last month. Mortgage rates will increase over the next year according to 36 percent up respondents compared to 33 percent who held this opinion in November .
Only 5 percent of Americans think that rental prices will ease over the next year while 43 percent expect rents to increase. The average expectation is for an increase of 3.5 percent in rents compared to the 3.2 percent average expressed in November.
