Housing Recovery Continuing, but not yet Robust -Fannie Survey

Americansrnexpectations regarding home prices ticked up decisively in February, both inrnterms of anticipating continued price increases and in the size of suchrngains.  Fannie Mae’s National HousingrnSurvey results released on Monday showed an increase of 7 percentage points torn50 percent in the share of survey respondents who<bexpect home prices to rise over the next 12 months, more than bouncing backrnfrom a 6 percentage point downturn in January. rnAmong that 50 percent, the average size of the expected price gain jumpedrnto 3.2 percent from 2.0 percent in January.</p

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Expectations about the direction ofrnmortgage interest rates have flattened out over the last few months withrnslightly over half (56 percent) expecting rates to increase while about a thirdrnexpect no change over the next 12 months.</p

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At the same time, those who believernthat it would be easy to get a mortgage dropped 7 percentage points fromrnJanuary’s all-time survey high of 52 percent while those who viewed thernpossibility as difficult increased the same 7 percentage points from 46 percentrnin January.   </p

Even with home prices expected tornrise and getting a mortgage to be more difficult, survey respondents who saidrnit was a good time to buy a house increased from January by 3 percentage pointsrnto 68 percent while those who see it as a good time to sell decreased by 3rnpercentage points to 34 percent.  The share who sayrnthey would buy if they were going to move fell four percentage points to 66%,rnand those who say they would rent increased to 30%. </p

Respondentsrnexpect rentals to be more expensive over the next 12 months as well.  Fifty-one percent expect rents to increaserncompared 48 percent in January.  Thernaverage expectation for rents also shot up, going from a 2.8 percent rise torn4.3 percent in only a month. </p

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The share of respondents who say therneconomy is on the wrong track increased 3 percentage points to 57 percent inrnFebruary, following a four-month decline. Despite a decrease in optimism acrossrnsome of the indicators last month, consumer attitudes remain in generallyrnpositive ranges with 43 percent of respondents saying they expected theirrnpersonal financial situation to get better over the next 12 months, down 1rnpoint from January.  The share ofrnrespondents who say their household income is significantly higher than it wasrn12 months ago increased 2 percentage points to 24 percent while those who sayrntheir household expenses are significantly higher than they were 12 months agornrose 4 percentage points to 36 percent.</p

“Similar to the noisy economic andrnhousing data published over the past few months, we’ve seen a correspondingrnincrease in volatility in our survey results, particularly for home pricernexpectations and perceptions about the ease of getting a mortgage,” said DougrnDuncan, senior vice president and chief economist at Fannie Mae. “Weather mayrnhave played a role, as suggested by a 6 percentage point jump over the past twornmonths in the share of consumers who say their household expenses arernsignificantly higher than a year ago. This response would be consistent withrnhigher home heating costs. Despite the volatile month-to-month changes, wernbelieve that the housing recovery is continuing, but is not yet robust.”</p

Fannie Mae’s survey polls 1,000rnAmericans, homeowners and renters, by phone each month, asking over 100rnquestions to assess their attitudes toward owning and renting a home, home andrnrental price changes, homeownership distress, the economy, household finances,rnand overall consumer confidence.  Therncurrent report relies on data collected between February 1 and February 23, 2014.

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