Cautious Consumers Stalling Housing Momentum

Pete Bakel

202-752-2034

WASHINGTON, DC – Positive momentum in the housing market continues to lose steam as Americans remain cautious about their personal finances and the state of the economy, according to Fannie Mae’s November National Housing Survey results. Among those surveyed, nearly two-thirds believe the economy is on the wrong track while the share expecting their personal finances to worsen during the next year has increased during the past few months to 22 percent. Meanwhile, consumers’ home price expectations have declined steadily since summer. The share who say prices are going to increase within the next 12 months fell to 45 percent and the average home price change expectation dipped to 2.5 percent from 2.9 percent. In addition, the share of those who expect mortgage rates to climb in the next 12 months has remained at an elevated level since it spiked in June.

“We continue to see caution as the defining feature of Americans’ attitudes toward the economy and their personal financial situation. In this environment, the housing recovery is likely to improve, but only at a gradual pace,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Our November National Housing Survey results show a loss of momentum in expectations for home prices and personal finances. Also, the majority of consumers expecting higher mortgage rates implies a slowing of housing market momentum. As the economy continues to improve and household balance sheets for most Americans are slow to repair, we continue to see the transition to a full housing recovery as a slow process. Upcoming fiscal policy discussions and labor market developments may also lead to some bumps along the way.” 

SURVEY HIGHLIGHTS

Homeownership and Renting

• At 2.5 percent, the average 12-month home price change expectation continued to fall, decreasing 0.4 percent from last month.
• The share of people who say home prices will go up in the next 12 months fell slightly to 45 percent, and those who say home prices will go down decreased to 9 percent.
• The share of respondents who say mortgage rates will go up in the next 12 months increased by 2 percentage points to 59 percent.
• The share who say it is a good time to buy a house continued to drop, falling to a survey low of 64 percent.
• The average 12-month rental price change expectation dropped to an all-time survey low of 2.8 percent.
• Fifty percent of those surveyed said home rental prices will go up in the next 12 months, decreasing two percentage points from last month.
• Fifty percent of respondents said it would be easy for them to get a home mortgage today, an increase of 4 percentage points from last month.
• The share of respondents who said they would buy if they were going to move decreased slightly, to 68 percent.

The Economy and Household Finances

• The share of respondents who say the economy is on the right track increased to 32 percent but remains low compared to earlier this year.
• The percentage of respondents who expect their personal financial situation to get worse in the next 12 months held steady at 22 percent.
• The share of respondents who say their household income is significantly lower than it was 12 months ago increased slightly to 17 percent.
• At 33 percent, the share of respondents who say their household expenses are significantly higher than they were 12 months ago fell slightly from 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, 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). 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 November 2013 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 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 November 2013 Fannie Mae National Housing Survey was conducted between November 1, 2013 and November 20, 2013. 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.