Consumers in Cautionary Holding Pattern as Fiscal Policy Debate Unfolds

Pete Bakel

202-752-2034

WASHINGTON, DC – Americans tempered their optimism toward the housing market in September, perhaps indicating growing caution surrounding the fiscal policy debate, according to the Fannie Mae September 2013 National Housing Survey results. Although consumers continue to remain generally positive on average, their attitudes around housing have reached a plateau or decreased during the past three months. Notably, the September survey results may not reveal the full effect of the shutdown on October 1 and the pending debt ceiling debate, which will likely become more apparent in October and the coming months.

“Our September National Housing Survey results show that the improvements in consumer housing attitudes witnessed in recent months softened ahead of the government shutdown,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Americans’ awareness of policy uncertainty leading up to the October 1st shutdown and the pending debt ceiling debate appears to have grown as indicated by an apparent cautionary holding pattern in overall consumer housing and personal finance sentiment.”

“How and when these fiscal policy issues are addressed could impact consumer attitudes in October and beyond, and influence the fragile economic and housing recovery,” Duncan said. “Fifty-five percent of Americans continue to believe that the economy is on the wrong track, while 39 percent think the economy is on the right track. This gap narrowed to 16 percentage points in September. The gap could widen, depending on the outcome of the debt ceiling negotiations as the Treasury expects that the extraordinary measures to extend the nation's borrowing authority will be exhausted by October 17. For example, during the contentious 2011 debt ceiling debate and the resulting S&P downgrade of the U.S. government debt, our survey showed that the right track-wrong track spread widened to a survey record of 64 percentage points.”  

SURVEY HIGHLIGHTS

Homeownership and Renting

• At 3.1 percent, the average 12-month home price change expectation continued to fall, decreasing 0.3 percent from last month.
• The share of people who say home prices will go up in the next 12 months fell by 3 percentage points to 52 percent, while those who say home prices will go down fell to match July’s survey low at 6 percent.
• The share of respondents who say mortgage rates will go up in the next 12 months increased 3 percentage points from last month to a survey high of 63 percent.
• The share who say it is a good time to buy a house increased by 1 percentage point to 72 percent; those who say it is a good time to sell a house increased by 2 percentage points to 38 percent.
• The average 12-month rental price change expectation fell to 3.4 percent.
• Fifty-two percent of those surveyed say home rental prices will go up in the next 12 months—a slight decrease from August.
• Forty-seven percent of respondents think it would be easy for them to get a home mortgage today, a slight increase from last month.
• The share of respondents who said they would buy if they were going to move increased to a survey high of 69 percent.

The Economy and Household Finances

• At 39 percent, the share of respondents who say the economy is on the right track increased 2 percentage points from August.
• The share of people who expect their personal financial situation to get better over the next 12 months decreased to 42 percent.
• The share of respondents who say their household income is significantly higher than it was 12 months ago fell by one percentage point from August, to 22 percent.
• At 33 percent, the share of respondents who say their household expenses are significantly higher than they were 12 months ago rose 1 percentage point from last month.

The most detailed consumer attitudinal survey of its kind, the Fannie Mae National Housing Survey polled 1,006 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 September 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 September 2013 Fannie Mae National Housing Survey was conducted between September 1, 2013 and September 23, 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.