Fannie Mae's National Housing Survey for August indicates that Americans are growing more pessimistic about the economy, home prices and their own personal finances.  More than three-quarters of those responding to the survey said that the economy is on the wrong track, up from 70 percent in July and the highest percentage in over a year.  One year ago the figure was 60 percent.  Sixteen percent think it is on the right track compared to 23 percent one month earlier and 28 percent in August 2010.   

 According to Doug Duncan, vice president and chief economist of Fannie Mae, "The degree to which consumer attitudes appear to be sensitive to global events is interesting, and seems to be reflected in their view of the economy and their growing overall pessimism. I believe the public was looking at the U.S. debt, deficit, and the ensuing political struggle with one eye, and looking at Europe and their sovereign debt issues with the other eye, and saying: 'This is not what we want.'"

Fannie Mae's survey is conducted with 1,000 Americans, both homeowners and renters, each month and is designed to assess attitudes toward owning and renting a home, mortgage rates, attitudes toward owning and renting, the national and their household's economy, and overall consumer confidence.  Fannie Mae believes that the results of their attitudinal survey may serve as key inputs for determining the future course of its investment across housing types.

Americans are only marginally more optimistic about their own situation than the economy as a whole.  The percentage of respondents who expect their financial condition to improve over the next 12 months was unchanged from July at 35 percent but the percentage that expect it to get worse rose from 20 to 22 percent, the fourth consecutive increase and the highest level in a year.   One year ago 41 percent were looking forward to an improvement and 16 percent had a negative outlook. 

Household income has remained unchanged for the last 12 months for 61 percent of respondents, 21 percent have increased their income and 17 percent have lost ground.  These numbers are virtually unchanged from last month.  In August 2010 17 percent said their income had risen, 22 percent said it was lower than a year earlier, and 60 percent reported no change.  At the same time, expenses have risen significantly in the past year according to 41 percent of respondents compared to 35 percent one year ago and remained the same for 47 percent compared to 55 percent last year.  The month-to-month changes in the responses were minimal.

American attitudes toward home prices also the most negative in a year.  Twenty percent expect an improvement in home prices over the next year, down from 23 percent in July and 24 percent one year ago while 27 percent expect further deterioration compared to 24 percent in July and 19 percent in August 2010.  No change is expected by 49 percent.  In September 2010 Americans began to express confidence that prices on average would increase but August was the third month in a row when prices were expected to drop, this time by an average of -0.5 percent.   The expected change was -0.3 in July.

Rental prices, on the other hand, were predicted to rise by 46 percent, the same as last month, and stay the same by 41 percent, down from 43 percent.  Only 6 percent expect lower rents over the next year, down from 7 percent in July.  Respondents expect rents to 3.5 percent, one basis point lower than July.  A year ago rents were predicted to rise 2.4 percent.

Low mortgage rates are here to stay in the view of more than half of survey responses with 11 percent looking for even lower rates and 40 percent anticipating no change in the next year.  Forty-five percent say rates will increase.  Despite a lot of variation during the ensuing 12 months, all three responses are within 2 percentage points of those last August.    

Sixty-nine percent view this as a good time to buy a house, up from 66 percent in July and identical to responses one year ago.  The percentage who view it as an opportune time to sell decreased to 9 percent from 11 percent in July and 13 percent in August 2010.  Thirty-four  percent say their next home will be a rental, the same as in July and 2 percentage points more than a year ago while 62 percent would buy, up one point month-over-month and unchanged from last year.