Housing Survey Respondents see Good Times Winding Down

Fannie Mae's March National Housing Survey indicates that consumers may finally realize that the good times for buy a home might not last forever.  Nearly half of those surveyed expect higher rental prices over the next 12 months, the highest number since the survey began in 2010, while 33 percent expect home prices to increase, up from 28 percent in February and the highest percentage in over a year.

Even with historically low interest rates and the lowest home prices in nearly a decade, consumers haven't rushed to buy, some apparently because they were not sure home prices had bottomed out, but many Americans were also uncertain about their own finances.  That too is changing with 44 percent believing their personal situation will improve over the next year. These trends may be providing Americans with an increased sense of urgency to buy a home as 73 percent of Americans now believe it is a good time to buy a home, up from seventy percent in February.

On average, Americans expect home prices will rise by 0.9 percent over the next year and 39 percent expect that mortgage rates will also increase in the next year, 5 percentage points more than last month.

Homebuying may also look more attractive when compared to renting as the survey showed that 48 percent of homeowners and renters alike expect rents to increase by 4.1 percent on average over the next year. 

The percentage of respondents who say it is a good time to buy rose by three points to 73 percent, the highest level in over a year, while the percentage of respondents who say it is a good time to sell rose one point to 14 percent this month.  Sixty-six percent of respondents say they would buy their next home if they were to move, up one point since February while thirty percent say they would rent, also up one point.

"Conditions are coming together to encourage people to want to buy homes," said Doug Duncan, vice president and chief economist of Fannie Mae. "Americans' rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that homeownership is a more compelling housing choice." 

Survey respondents' comfort level about their own finances continues to rise, but confidence in the overall economy leveled off in March.  Only 12 percent of respondents think their personal finances will worsen over the next year - tied with February and with January 2011 for the lowest number to date.  The remaining 88 percent is split almost equally between those who expect their circumstances will improve and those who think it will remain essentially the same.

Twenty-one percent of Americans say their income is significantly higher than one year ago, 1 percent more than last month, while 63 percent say it has stayed the same.  Expenses have increased for 34 percent of respondents, an increase of one percentage point.

Right track/wrong track numbers which surged to the positive between November and February has now leveled off.  In November only 16 percent of respondents thought the economy was on the right track; that had risen to 30 percent by January and went up another 5 points in February but the March right track responses were at 35 percent, unchanged from the month before.  After following the inverse track, dropping from 77 percent in September to 57 percent last month, responses portraying the economy as on the wrong track rose one point this month to 58 percent. 

The Fannie Mae National Housing Survey polls 1003 Americans by telephone each month.  The survey panels are composed of both renters and homeowners who are asked about 100 questions about attitudes toward homeownership, renting, and personal finances.  The current survey was conducted between March 1 and March 28, 2012.