Consumer Expectations on Housing Remain Upbeat Amid Cautious Economic and Financial Outlook

August 07, 2012

Pickup in July Jobs Growth May Help Ease Americans' Concerns

Pete Bakel

202-752-2034

WASHINGTON, DC – Americans' confidence in the economy and their personal finances continues to stall but this has not interrupted their more recently positive outlook on the housing market, according to results from Fannie Mae's July 2012 National Housing Survey. While the July employment picture was encouraging, it is too soon to see it as a signal of a meaningful pickup in economic growth or in consumer outlook for the overall economy.

"Not surprisingly, we see consumers’ attitudes about their household finances remain cautious in this month's survey, and they continue to show signs of job worries and financial stress," said Doug Duncan, senior vice president and chief economist of Fannie Mae. "However, it is encouraging to see that consumer expectations regarding housing largely continue to be upbeat. The recent July jobs report showing the strongest nonfarm payroll gain in five months should help to ease consumers' fear that the economic expansion is faltering. Improvement in the labor market, if sustained, would help bolster the upward trend of consumer attitudes toward housing, which so far has been a glimmer of light amid a dimming economic outlook."

Consumer optimism regarding the housing market remained strong in July. Survey respondents expect home prices to increase 1.7 percent in the next 12 months, down slightly from the survey high of 2.0 percent recorded in June. Eleven percent of respondents – the lowest level recorded since the survey began in June 2010 – believe home prices will drop in the next year. Also, in the highest level seen since the survey's inception, 16 percent of consumers say it is a good time to sell.

Meanwhile, 25 percent of employed respondents are concerned about losing their job in the next 12 months, up 3 percentage points since last month. The share of respondents who say the economy is on the right track dipped again slightly – down to 35 percent in July – following the highest point recorded in May. Fifteen percent of Americans polled expect their personal financial situation to get worse, the highest level recorded since January 2012, while those who expect their personal financial situation to improve remained at 43 percent.

SURVEY HIGHLIGHTS

Homeownership and Renting

• Average home price change expectation decreased to 1.7 percent, down 0.3 percentage points from the survey high recorded last month.
• Eleven percent of those surveyed say home prices will go down in the next year, the lowest level since the survey’s inception in June 2010.
• At 36 percent, the percentage of respondents who say mortgage rates will go up in the next 12 months has declined by 5 percentage points since May 2012.
• Sixteen percent of respondents say it is a good time to sell, the highest level since the survey’s inception.
• The percentage of respondents who say it is a good time to buy has remained steady at 73 percent.
• At 3.9 percent, the average rental price change expectation has remained steady since May 2012.
• The percentage of respondents who say they would buy if they were going to move decreased by 3 percentage points to 66 percent.
• Thirty percent of respondents say they would rent if they were going to move, up 3 percentage points from last month.

The Economy and Household Finances

• Consumer optimism continues to wane slightly since its peak in May 2012, with 35 percent saying the economy is on the right track, a slight decrease from last month.
• The percentage of respondents who expect their personal financial situation to get worse rose slightly to 15 percent, the highest level since January 2012, while expecting their personal financial situation to get better remained at 43 percent.
• Twenty percent of respondents say their household income is significantly higher than it was 12 months ago, while those who say it is significantly lower has remained steady at 15 percent.
• Fifty-nine percent of those surveyed say their household expenses are about the same as they were a year ago, a 4 percentage point increase over June and the highest level recorded since the survey’s inception.

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 July 2012 survey, as well as a podcast providing an audio synopsis of the survey results and technical notes on survey methodology and 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 July 2012 Fannie Mae National Housing Survey was conducted between July 5, 2012 and July 26, 2012.  Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.