Fannie Mae National Housing Survey: Americans Increasingly Glum on Housing, Economy
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.