Fannie Survey Says: Housing Attitude Remains Cautious

Even though consumers are becoming increasingly optimistic about the economy and comfortable that it is heading in the right direction, results of the Fannie Mae's December National Housing Survey indicate that they aren't quite so sure of the housing market.  Positive answers to the question of whether the economy is on the right or the wrong track increased by 5 percentage points from the November survey while wrong track answers decreased by one, bringing the two tracks as close together as they have been since the survey began.

At the same time those who view this as a good time to buy a home decreased from 68 percent to 64 percent, an all-time survey low.  Those who think it is a good time to sell went up by one point to 40 percent.  When asked if their next home would be one they owned or rented the preference for renting increased by 3 points to 41 while 61 percent said they would buy, down 1 point from November and also an all-time survey low. 

"Despite consistent and robust job growth in recent months, consumer attitudes toward housing remained cautious in the final month of 2014," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Our survey results show that consumer housing sentiment has, on average, been moving sideways amid some improvement in the general view of the economy. It is not surprising that the housing sector continues to lag behind the rest of the economy given the long-term financial commitment that getting a mortgage represents. Many prospective homebuyers want to be certain that their personal finances can withstand potential downside risks to the economy." 

"One notable result in the December survey is that the share of consumers believing that it would be easy to get a mortgage exceeds those saying it would be more difficult to get a mortgage by the widest amount in the survey's history," said Duncan. "While this is a welcome signal, softness in consumer attitudes that drive housing demand will make for a subdued recovery and should persist absent more meaningful and sustained gains in household income." 

Forty-six percent of those surveyed think home prices will increase over the next 12 months, up from 44 percent but the average amount those respondents expect homes prices to rise dipped to 2.3 percent from 2.6 percent.  Eight percent of respondents are looking for lower home prices, up from 6 percent the previous month.  Nearly half expect interest rates to rise, up 3 points from 45 percent in November.

Rental prices are expected to rise over the next 12 months by 53 percent of those questioned, unchanged from the last survey, but the average price increase expected increased from 3.6 percent to 4.1 percent.

While they are encouraged by the economy the percentage of respondents who expect a positive change in their personal financial situation over the next 12 months fell by 1 point to 45 while those who reported their income had risen over the last six months was unchanged at 25 percent. 

The National Housing Survey polls 1,000 Americans each month by phone.  Renters and home owners are asked over 100 questions to assess their attitudes about owning and renting a home, home prices, homeownership distress, and both the national economy and their personal finances.  The current survey was conducted between December 1, 2014 and December 14, 2014.