Expecting Higher Home Prices? Fannie Mae Says You're Not Alone

The April edition of Fannie Mae’s NationalrnHousing Survey revealed increasing optimism in American attitudes toward bothrnhousing and the overall economy.  Virtuallyrnevery positive indicator in the survey ticked upward.</p

More than half of survey respondents nowrnexpect home prices to climb within the next 12 months.  Fifty-one percent said they expected suchrnimprovement, up 3 percentage points from March and 19 points higher than inrnApril 2012.   Expectations of how large that increase willrnbe remained at an average of 2.7 percent for the second month in a row.</p

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The percentage of respondents who feel now is a good time tornbuy remained at 71 percent.  That numberrnhas moved in a tight one-to-two point range over the last year.  However, the percentage of those who feelrnthat now is a good time to sell jumped 4 percentage points in April to 30rnpercent compared to 15 percent one year ago. rnThis may be the best news coming out of the survey as recent market datarnsuggest that five out of eight people who buy a home first have to sell and manyrnexperts feel potential sellers have been waiting for a better market.  This has contributed to tight inventories andrnpossibly delayed the housing recovery in many areas.</p

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“For the first time in the survey’s three-year history, thernmajority of Americans surveyed now expect home prices to increase,” said DougrnDuncan, senior vice president and chief economist at Fannie Mae. “Crossing thern50 percent threshold marks a significant milestone as most Americans believe arnhousing recovery is truly occurring throughout the country. Reflecting thatrnincreased optimism toward housing, the share of Americans who think it is arngood time to sell has doubled during the last year. Many homeowners who havernbeen underwater are gradually returning to positive equity, and selling is nowrnbecoming an available and attractive option again.”</p

The share of respondents who say mortgage rates willrngo up fell 3 percentage points to 43 percent, while those who say they will gorndown increased slightly to 7 percent.</p

The percentage of survey respondents who expect rentalrnprices to increase over the next 12 months dropped from 50 to 48 percent monthrnover month.  The average expectation forrnincreases among those who expect rents to rise was unchanged at 4.1 percent. </p

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The share of respondents who said they would buy if theyrnwere going to move increased slightly to 65 percent.</p

When asked about the overallrneconomy 39 percent said it was on the right track, an increase of 4 percentagernpoints.  Wrong track answers dropped 2rnpercentage points to 56 percent. </p

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The number of persons who feltrntheir personal financial situation would worsen over the next year dropped 5rnpoints to 16 while both the percentage expecting improvement and expecting nornchange rose from 39 to 43 percent and 38 to 41 percent respectively.</p

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Twenty percent of respondents say their household income isrnsignificantly higher than it was 12 months ago, holding steady from last monthrnand eleven percent reported significantly lower household expenses compared torn12 months ago, a 3 percentage point increase over March.</p

The National Housing Survey is conducted by phone among arnrolling panel of 1001 respondents.  Bothrnrenters and homeowners are included in the group which are asked more than 100rnquestions on their attitudes toward home ownership and renting, homeownershiprndistress, personal finances, and consumer confidence.  The survey has been conducted since 2010.

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