Negativity was pervasive in the results of Fannie Mae's July National Housing Survey (NHS).  Respondents indicated falling expectations about the economy, housing, and their own personal financial situation.  They did however feel that home prices would continue to rise - which could be either positive or negative depending on the perspective - as well as interest rates.

After climbing fairly steadily earlier in the year, July saw a huge 7 percentage point drop in the percentage of respondents who believe now is a good time to sell a house. Those who believe it is a good time to buy dropped to 61 percent-an all-time survey low.



Forty-nine percent of respondents expect home prices to increase over the next 12 months, 2 percentage points more than in June, with an average expectation of a 3 percent gain.  Just over half of respondents expect mortgages rates to go up over the next year, an uptick of 1 point.  Those who feel it would be difficult for them to obtain a mortgage rose from 46 to 49 percent with a slightly smaller correspondent fall in those who expect no problems.  It was the first survey since October in which more respondents expected a difficult time with financing than did not.



"Consumer attitudes toward housing slid back this month," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The share of consumers who think it's a good time to sell a home posted a sizable decrease from a record high in the prior month, even as home price change expectations strengthened. Deteriorating consumer assessments of income growth over the past year as well as increased caution around the direction of the economy and personal financial expectations may be contributing to the pullback in sentiment. Still, it is premature to read too much into this month's results as the survey was taken around the time of increased global turmoil, including Greece's potential default and China's stock market plunge, which has receded somewhat. Most of our key indicators are as strong or stronger than they were at this time last year, which is indicative of an improving housing market this year."

The share of consumers saying the economy is on the wrong track rose by 3 percentage points to 54 percent in July.  This lagging confidence in the economy may be behind a 5 percentage point drop in those who think rents will continue to increase over the next year.  The 54 percent who do expect increases have raised their expectations slightly, from 4.2 to 4.5 percent.



Those who expect their personal financial situation to improve over the next year fell to 44 percent, while those reporting a significantly lower income compared to 12 months ago increased to 15 percent-marking the first change in this indicator in three months.  Those who say their household expenses are significantly higher than they were 12 months ago remained at 31 percent.

The Fannie Mae survey polls 1,000 Americans by phone each month.  Respondents include both homeowners and renters and the more than 100 questions asked are designed to assess 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 monthly since June 2010.