Fannie Mae Releases October Consumer Indicators

November 07, 2011

New Indicators Show Consumers in a Pessimistic Holding Pattern

Pete Bakel

202-752-2034

Record Levels of Americans Expect No Improvement in Personal Finances

WASHINGTON, DC – Americans continue to be pessimistic about home prices, the economy, and personal finances, according to results from Fannie Mae's October National Housing Survey.  Findings show that consumers have experienced stagnant incomes over the past year and do not expect their personal financial situations to improve over the next twelve months. 

“The October survey showed that consumers’ outlook for the housing market has remained downbeat, as they expect home prices to decline over the next year, extending the streak of negative outlooks to five consecutive months.” said Doug Duncan, vice president and chief economist of Fannie Mae. “More positive economic headlines over the past month failed to lift consumers' moods.  While their views regarding their personal finances and the direction of the economy have not deteriorated further, it is discouraging to see the lack of appreciable improvement after overall sentiment took a hit during the debt ceiling debate in August.” 

“The fact that sentiment appears to be in a holding pattern at depressed levels is a cause for concern for the development of the housing market and for the economy as a whole, as there will be no meaningful economic recovery without a housing recovery,” Duncan stated. 

SURVEY HIGHLIGHTS

The Economy and Household Finances

• An all-time high of 46 percent of consumers expect their personal financial situation to stay the same over the next 12 months.
• An all-time high of 65 percent of consumers say their income is about the same as it was 12 months ago.
• Seventy-seven percent say the economy is off on the wrong track (unchanged since September), while just 16 percent think the economy is on the right track, also unchanged since September and tying the all-time low number.
• Thirty-six percent report significantly higher expenses compared to 12 months ago, (down 7 percentage points since last month).

Homeownership and Renting

• For the fifth month in a row, Americans expect home prices to decline over the next 12 months. On average, respondents expect home prices to decline by 0.3 percent.
• Just 19 percent of respondents expect home prices to increase over the next 12 months (up 1 percentage point since last month), while 23 percent say they expect home prices to decline (down by 2 percentage points since last month). Fifty-five percent say prices will stay the same, tying the all-time high number set last month.
• Thirty-six percent of Americans say that mortgage rates will go up over the next 12 months (up 3 percentage points since last month).
• While 69 percent of respondents say it is a good time to buy a home (up by 1 percentage point since last month), just 10 percent say it is a good time to sell (unchanged since last month).
• On average, Americans expect home rental prices to increase by 3.3 percent over the next 12 months, unchanged since last month.
• Thirty-one percent of Americans say they would rent their next home, while 66 percent say they would buy, (up by 3 percentage points since last month).

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 October 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 October 2011 Fannie Mae National Housing Survey was conducted between October 3, 2011 and October 26, 2011. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.