Home Price Expectations Continue to Decline

Responsesrnto the most recent National Housing Survey conducted by Fannie Mae showrnAmericans continue to be cautious in their appraisals of the housing recoveryrnand of their own financial outlook. rnRespondents appear to have recovered a little of their optimism aboutrnthe overall economy after October’s 12 percentage point drop in the numbers whornthought the country was on the right track. rnThe frequency of that response increased by 5 percentage points to 32rnpercent but is still well below September’s level.</p

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ThernNational Housing Survey is conducted each month by phone among a panel of 1,000rnhouseholds, both homeowners and renters. rnEach is asked about 100 questions to assess their attitude toward homernownership, renting, the economy, and their own personal finances.  The current survey was conducted over thernperiod of November 1-20.</p

Consumers’rnhome price expectations have declined steadily since last summer.  Forty-five percent of respondents now expectrnhome prices to continue to rise compared to 57 percent who held suchrnexpectations in June.  Among those whornexpect further increases the average increase expected dipped to 2.5 percentrnfrom 2.9 percent in September and 3.6 percent in June.  </p

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The share of those who expect mortgage rates to climb overrnthe next 12 months remains elevated at 59 percent after rising rapidly in Junernfrom the low 40 percent rage.  Only 3rnpercent of respondents expect further lowering of rates.  </p

The share who say it is a good time to buy a house continuedrnto drop, falling to a survey low of 64 percent. rnThe percentage who consider this a good time to sell has varied little sincernMay and is currently at 37 percent.</p

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“We continue to seerncaution as the defining feature of Americans’ attitudes toward the economy andrntheir personal financial situation. In this environment, the housing recoveryrnis likely to improve, but only at a gradual pace,” said Doug Duncan, seniorrnvice president and chief economist at Fannie Mae. “Our November NationalrnHousing Survey results show a loss of momentum in expectations for home pricesrnand personal finances. Also, the majority of consumers expecting higherrnmortgage rates implies a slowing of housing market momentum. As the economyrncontinues to improve and household balance sheets for most Americans are slowrnto repair, we continue to see the transition to a full housing recovery as arnslow process. Upcoming fiscal policy discussions and labor market developmentsrnmay also lead to some bumps along the way.”</p

Fifty percent of those surveyed said home rental prices willrngo up in the next 12 months, decreasing two percentage points from last monthrnbut the average 12-month rental price change expectation dropped to an all-timernsurvey low of 2.8 percent.  The averagernexpected increase was 4.6 percent in June.</p

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Fifty percent of respondents said itrnwould be easy for them to get a home mortgage today, an increase of 4rnpercentage points from last month.   rnThe share of respondents who said they would buy if theyrnwere going to move decreased slightly, to 68 percent.</p

Respondent’s expectations about their personal financialrnsituation did not change much; those who expect it to worsen over the next 12 monthsrnheld steady at 22 percent while those expecting an increase or no change werernfairly evenly divided at 39 and 38 percent. rn The share of respondents who sayrntheir household income is significantly lower than it was 12 months ago increasedrnslightly to 17 percent.

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