Fannie Mae Releases September Consumer Indicators

October 10, 2011

Americans Still Very Pessimistic About the Economy, Home Prices, and Household Finances

New Data Provides Timely Insights into Key Consumer Attitudes Driving Housing Decisions

WASHINGTON, DC – Americans are still very pessimistic about the economy, home prices, and household finances, according to results from Fannie Mae's September National Housing Survey. Findings demonstrate that consumers are paying close attention to economic news and what policymakers are saying, and continue to link their personal financial situations with the current macro economic environment.

“The September survey showed a marked deterioration in consumer expectations of home prices over the next year—their weakest outlook since monthly tracking began in June 2010,” said Doug Duncan, vice president and chief economist of Fannie Mae. “Despite a decline in negative economic headlines during September – in contrast to their ubiquity during the debt ceiling debate in August – consumers continue to demonstrate very negative attitudes. At the same time, the share of consumers expecting mortgage rates to go up dropped sharply to the lowest level we have recorded, likely influenced by the news that the Federal Reserve will attempt to keep interest rates low for years to come.”

“The lack of a sense of urgency to buy homes, given expectations for further declines in home prices and continued low mortgage rates, coupled with general pessimism regarding their own personal finances and the economy, bodes poorly for the recovery of the housing market,” Duncan stated.

SURVEY HIGHLIGHTS

Homeownership and Renting

• Americans noted a very large decline in their expectation for mortgage rates in September, with only 33 percent saying that mortgage rates will go up in the next 12 months (down 12 percentage points since August – the lowest number we have recorded in our monthly tracking).
• For the fourth month in a row, Americans expect home prices to decline over the next year. On average, Americans expect home prices to go down by 1.1 percent, the highest expected decline to date.  
• Only 18 percent of respondents expect home prices to increase over the next 12 months (the lowest reported number to date in the National Housing Survey), while 25 percent say they expect home prices to decline (down by 2 percentage points since August).
• While 68 percent of Americans say it is a good time to buy a home (down 1 percentage point since last month), only 10 percent of those polled say it is a good time to sell one’s home (up by 1 percentage point since August).
• On average, Americans expect home rental prices to go up by 3.3 percent over the next year, down slightly from the expected increase of 3.5 percent observed in August.
• Despite continued consumer caution about taking on a large financial obligation to buy a home, 63 percent say they would buy their next home if the were going to move (up by 1 percentage point since August), while 32 percent of Americans say they would rent their next home (down 2 percentage points since last month).

 The Economy and Household Finances

• Seventy-seven percent of Americans say the economy is on the wrong track (down only 1 percentage point from last month), while only 16 percent think the economy is on the right track (the same as in August).
• The number of Americans who expect their personal financial situation to worsen over the next year has decreased for the first time in four months (down from 22 percent in August to 19 percent in September).
• Forty-three percent of Americans report significantly higher expenses compared to one year ago. This number has increased for five consecutive months, while the majority of respondents say their household income has remained the same.

The most detailed consumer attitudinal survey of its kind, the Fannie Mae National Housing Survey polled 1,002 Americans via live telephone interview to assess their attitudes toward owning and renting a home, mortgage rates, 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). 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 September 2011 survey, as well as technical notes on survey methodology and the questions asked of respondents associated with each monthly indicator, please visit the Fannie Mae Monthly National Housing Survey site.  Also available on the site are quarterly survey results, which provide a detailed assessment of combined data results from three monthly studies. The September 2011 Fannie Mae National Housing Survey was conducted between September 6, 2011 and September 25, 2011. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.