Consumers Not Ready to Move on Housing Despite Improved Outlook on Economy

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Jan 07, 2015, 09:00 ET

WASHINGTON, Jan. 7, 2015 /PRNewswire/ -- Americans are becoming more optimistic about the economy, but consumer confidence toward the housing market is lagging, according to results from Fannie Mae's December 2014 National Housing Survey™. Likely bolstered by a strengthening employment sector, the share of consumers who believe the economy is headed in the right direction improved by 5 percentage points to 41 percent. Those citing that the economy is heading in the wrong direction declined to 51 percent, the fifth consecutive monthly decrease. However, although the share of respondents who think it would be easy to get a mortgage today increased to 52 percent, tying the all-time survey high, the share who say their household income is significantly higher than it was 12 months ago has remained flat at 25 percent.

"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."

SURVEY HIGHLIGHTS

Homeownership and Renting

The average 12-month home price change expectation fell to 2.3 percent.
The share of respondents who say home prices will go up in the next 12 months rose to 46 percent. The share who say home prices will go down increased to 8 percent.
The share of respondents who say mortgage rates will go up in the next 12 months rose by 3 percentage points to 48 percent.
Those who say it is a good time to buy a house fell to 64 percent. Those who say it is a good time to sell increased by 1 percentage point to 40 percent.
The average 12-month rental price change expectation increased to 4.1 percent.
The percentage of respondents who expect home rental prices to go up in the next 12 months remained at 53 percent.
The share of respondents who think it would be easy to get a home mortgage today increased to 52 percent—equaling an all-time survey high—while the share saying it would be difficult to get a mortgage dropped to 44 percent—a survey low.
The share who say they would buy if they were going to move fell to 61 percent—an all-time survey low—while the share who would rent increased 3 percentage points to 34 percent.

The Economy and Household Finances

The share of respondents who say the economy is on the right track increased by 5 percentage points to 41 percent.
The percentage of respondents who expect their personal financial situation to get better over the next 12 months decreased to 45 percent.
The share of respondents who say their household income is significantly higher than it was 12 months ago remained at 25 percent.
The share of respondents who say their household expenses are significantly higher than they were 12 months decreased to 34 percent.

The most detailed consumer attitudinal survey of its kind, Fannie Mae's National Housing Survey™ polled 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership 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). To reflect the growing share of households with a cell phone but no landline, the National Housing Survey has increased its cell phone dialing rate to 60 percent as of October 2014. For more information, please see the Technical Notes. 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.

For detailed findings from the December 2014 survey, as well as technical notes on survey methodology and questions asked of respondents associated with each monthly indicator, please visit the Fannie Mae Monthly National Housing Survey page on fanniemae.com. Also available on the site are in-depth topic analyses, which provide a detailed assessment of combined data results from three monthly studies. The December 2014 National Housing Survey was conducted between December 1, 2014 and December 14, 2014. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

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SOURCE Fannie Mae