Tuesday, March 19, 2013

Americans Expect Home Prices and Mortgage Rates to Increase

Consumer attitudes toward the economy and housing continue to diverge this winter, according to Fannie Mae’s February 2013 National Housing Survey results. On the one hand, consumers continue to express strong positive attitudes toward housing. On the other hand, sentiment about the economy and household finances is stalled. Average 12-month home price expectations and the share of consumers who believe home prices will go up over the next year both rose to record highs, and the percentage of Americans who say mortgage rates will rise reached its highest level since August 2011. At same time, Americans’ views on their personal financial situation, household income, and the direction of the economy fell or remained flat.
“Despite fiscal headwinds and political uncertainty, consumer sentiment toward housing is robust and continues to gather strength,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “We expect home prices to firm further amid a durable housing recovery, gradually reducing the population of underwater borrowers and helping to boost the share of consumers who say that now is a good time to sell."
“Since reaching its trough last September, the share of consumers expecting mortgage rates to rise has trended up,” said Duncan. “However, despite historically low mortgage rates, nearly half of borrowers have never refinanced their mortgage. Combined with the scheduled year-end HARP deadline, rising rate expectations should prompt some borrowers to refinance soon to take advantage of more favorable mortgage terms and add to their disposable income, helping to offset ongoing fiscal drag.”

►The percentage who think mortgage rates will go up increased by 4 percentage points to 45 percent, the highest level since August 2011, while those who think they will go down held steady at seven percent.
►Twenty-five percent of respondents say it is a good time to sell a house, the highest level since the survey’s inception in June 2010.
►Fifty percent of those surveyed say home prices will go up in the next 12 months, holding steady from January at the highest level since the survey’s inception.
►The share of respondents who said they would buy if they were going to move increased by two percentage points to 67 percent.


Fannie Mae's National Housing Survey polled 1,008 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, home ownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts (findings are compared to the same survey conducted monthly beginning June 2010). Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future.


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