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

Fannie Mae’s National Housing Survey forrnAugust indicates that Americans are growing more pessimistic about the economy,rnhome prices and their own personal finances.  More than three-quarters of those respondingrnto the survey said that the economy is on the wrong track, up from 70 percentrnin July and the highest percentage in over a year.  One year ago the figure was 60 percent.  Sixteen percent think it is on the rightrntrack compared to 23 percent one month earlier and 28 percent in Augustrn2010.   </p

 According to Doug Duncan, vicernpresident and chief economist of Fannie Mae, “The degree to which consumerrnattitudes appear to be sensitive to global events is interesting,rnand seems to be reflected in their view of the economy and theirrngrowing overall pessimism. I believe the public was looking at thernU.S. debt, deficit, and the ensuing political struggle with one eye, andrnlooking at Europe and their sovereign debt issues with the other eye, andrnsaying: ‘This is not what we want.'”</p

Fannie Mae’s survey is conducted with 1,000rnAmericans, both homeowners and renters, each month and is designed to assessrnattitudes toward owning and renting a home, mortgage rates, attitudes towardrnowning and renting, the national and their household’s economy, and overallrnconsumer confidence.  Fannie Mae believesrnthat the results of their attitudinal survey may serve as key inputs forrndetermining the future course of its investment across housing types.</p

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

Household income has remained unchangedrnfor the last 12 months for 61 percent of respondents, 21 percent have increasedrntheir income and 17 percent have lost ground. rnThese numbers are virtually unchanged from last month.  In August 2010 17 percent said their incomernhad risen, 22 percent said it was lower than a year earlier, and 60 percentrnreported no change.  At the same time, expensesrnhave risen significantly in the past year according to 41 percent of respondentsrncompared to 35 percent one year ago and remained the same for 47 percentrncompared to 55 percent last year.  Thernmonth-to-month changes in the responses were minimal.</p

American attitudes toward home prices alsornthe most negative in a year.  Twentyrnpercent expect an improvement in home prices over the next year, down from 23rnpercent in July and 24 percent one year ago while 27 percent expect furtherrndeterioration 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 expressrnconfidence that prices on average would increase but August was the third monthrnin a row when prices were expected to drop, this time by an average of -0.5rnpercent.   The expected change was -0.3rnin July.</p

Rental prices, on the other hand, werernpredicted to rise by 46 percent, the same as last month, and stay the same byrn41 percent, down from 43 percent.  Only 6rnpercent expect lower rents over the next year, down from 7 percent inrnJuly.  Respondents expect rents to 3.5rnpercent, one basis point lower than July. rnA year ago rents were predicted to rise 2.4 percent. </p

Low mortgage rates are here to stay inrnthe view of more than half of survey responses with 11 percent looking for evenrnlower rates and 40 percent anticipating no change in the next year.  Forty-five percent say rates willrnincrease.  Despite a lot of variation duringrnthe ensuing 12 months, all three responses are within 2 percentage points of thosernlast August.    </p

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

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