Americans expectations regarding home prices ticked up decisively in February, both in terms of anticipating continued price increases and in the size of such gains. Fannie Mae's National Housing Survey results released on Monday showed an increase of 7 percentage points to 50 percent in the share of survey respondents who expect home prices to rise over the next 12 months, more than bouncing back from a 6 percentage point downturn in January. Among that 50 percent, the average size of the expected price gain jumped to 3.2 percent from 2.0 percent in January.
Expectations about the direction of mortgage interest rates have flattened out over the last few months with slightly over half (56 percent) expecting rates to increase while about a third expect no change over the next 12 months.
At the same time, those who believe that it would be easy to get a mortgage dropped 7 percentage points from January's all-time survey high of 52 percent while those who viewed the possibility as difficult increased the same 7 percentage points from 46 percent in January.
Even with home prices expected to rise and getting a mortgage to be more difficult, survey respondents who said it was a good time to buy a house increased from January by 3 percentage points to 68 percent while those who see it as a good time to sell decreased by 3 percentage points to 34 percent. The share who say they would buy if they were going to move fell four percentage points to 66%, and those who say they would rent increased to 30%.
Respondents expect rentals to be more expensive over the next 12 months as well. Fifty-one percent expect rents to increase compared 48 percent in January. The average expectation for rents also shot up, going from a 2.8 percent rise to 4.3 percent in only a month.
The share of respondents who say the economy is on the wrong track increased 3 percentage points to 57 percent in February, following a four-month decline. Despite a decrease in optimism across some of the indicators last month, consumer attitudes remain in generally positive ranges with 43 percent of respondents saying they expected their personal financial situation to get better over the next 12 months, down 1 point from January. The share of respondents who say their household income is significantly higher than it was 12 months ago increased 2 percentage points to 24 percent while those who say their household expenses are significantly higher than they were 12 months ago rose 4 percentage points to 36 percent.
"Similar to the noisy economic and housing data published over the past few months, we've seen a corresponding increase in volatility in our survey results, particularly for home price expectations and perceptions about the ease of getting a mortgage," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Weather may have played a role, as suggested by a 6 percentage point jump over the past two months in the share of consumers who say their household expenses are significantly higher than a year ago. This response would be consistent with higher home heating costs. Despite the volatile month-to-month changes, we believe that the housing recovery is continuing, but is not yet robust."
Fannie Mae's survey polls 1,000 Americans, homeowners and renters, by phone each month, asking over 100 questions 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 current report relies on data collected between February 1 and February 23, 2014.