Responses to Fannie Mae's National
Housing Survey for June showed more marked changes in several categories than
has been the case in recent months when data has been relatively flat. Most of the changes indicted slowly
increasing confidence in the housing market and in the economy in general,
however the greatest change was in consumer expectations about interest rates.
In January 55 percent of respondents
expected interest rates to rise over the ensuing 12 months, but as rates
softened those responses drifted back down and in May only 49 percent expected
higher rates. In the latest survey that
response shot up 6 points, returning to 55 percent.
Fannie Mae noted that consumer
confidence in the housing market has trended upward significantly during the
recovery but continues to be less than needed to return to "normal"
housing levels. While consumers appear
positive overall and are trending in that direction, some survey and market
indicators reflect a more subdued housing market, underscoring that the
recovery continues but is not yet robust.
The number of respondents who think
this is a good time to buy a house rose 2 percentage points from May to 70
percent but those who think it is a good time to sell reversed a four month
climb to drop from 43 to 40 percent.
The share of respondents who say
home prices will go up in the next 12 months fell to 46 percent, and while
expectations for that increase remained positive at 2.4 percent, that was
slightly lower than in the previous two months likely, Fannie Mae said, in
response to a lackluster housing picture in the first half of the year. The share who say home prices will go down
increased to 10 percent.
"Since we began collecting
monthly National Housing Survey data in June 2010, we've seen substantial
progress in consumer home price expectations and other key attitudinal measures
as the housing recovery gained its footing," said Doug Duncan, senior vice
president and chief economist at Fannie Mae. "Still, we do not expect to
see 'normal' levels of new residential construction, in the region of 1.6
million new housing units per year, before the end of 2016, our original
projection. Such a feat would require a pace of growth in housing starts not
seen in decades."
"The uptick this month in the
share of consumers expecting mortgage rates to go up and the accompanying
decline in home price expectations reflect the pause of activity in the housing
market so far this year," said Duncan. "Despite recent improvement,
we now expect an annual decline in existing home sales due to weak volume in
the first four months of the year associated with the rise in mortgage rates
mid-last year and the current dearth of supply of lower-priced homes. On the
bright side, the share of employed consumers who expressed concerns about
losing their job dropped to an all-time survey low in June, consistent with
last week's upbeat jobs report. This may encourage potential homebuyers to
enter the purchase market in 2014, helping to offset some of the weakness in
Fifty-four percent of respondents
expect rental prices to rise over the next 12 months compared to 51 percent in
May. The average 12-month price change expectation
increased to 4.3 percent from 3.9 percent.
Fifty-two percent of respondents
thought it would be easy for them to get a home mortgage today, increasing from
49 percent and matching the all-time high. The share who say they would buy if
they were going to move was slightly higher at 68 percent.
Americans seemed a bit more upbeat
in June about both their personal financial situation and the economy as a
whole. The share of respondents who say
the economy is on the wrong track fell by 3 percentage points from last month
to 54 percent and those who expect their personal financial situation to get
better over the next 12 months ticked up to 43 percent. Those who claim significantly lower income
than a year earlier was down 1 percentage point to 11 percent, a new all-time
low however those who say their household expenses have increased significantly
over the same period rose 4 points to 38 percent.
The National Housing Survey is
conducted monthly among 1,000 Americans, both renters and homeowners. Respondents are asked over 100 questions
during a phone 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. The survey has been
conducted since June 2010.