Lackluster Income Growth Weighing on Americans' Housing Sentiment

Share of Consumers Expecting to Buy a Home on Next Move Reaches Survey Low

Katie Penote

202-752-2261

WASHINGTON, DC – Consumer attitudes toward housing appear to have stalled somewhat amid a recent dip in confidence regarding personal finances and income growth, according to results from Fannie Mae's March 2015 National Housing Survey^™. Among those surveyed, the share who expect their personal financial situation to improve over the next year fell to 41 percent last month, while those who said their household income is significantly higher than it was 12 months ago fell to 22 percent. Additionally, the share of respondents who said they would buy a home if they were to move decreased 5 percentage points to 60 percent – a new all-time survey low. On the bright side, the share of consumers who believe now is a good time to sell a home reached a new survey high of 46 percent, narrowing the gap with those reporting it is a good time to buy, perhaps signaling a more balanced housing market. 

“Consumers are being patient prior to entering the housing market. Our March survey results emphasize how critical attitudes about income growth are to consumers’ outlook on housing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “We've seen modest improvement in total compensation resulting from a strengthened labor market. However, income growth perceptions and personal financial expectations both eased off of recent highs, consistent with Friday’s weak jobs report. Simultaneously, the share of consumers expecting to buy on their next move has declined. We believe the recent setback in consumer sentiment should be short lived if early signs of income growth bear out and occur in proportion to expected interest rate increases. Meanwhile, the wait for housing expansion continues.” 

SURVEY HIGHLIGHTS

Homeownership and Renting

• The average 12-month home price change expectation rose to 2.7 percent.
• The share of respondents who say home prices will go up in the next 12 months rose to 48 percent. The share who say home prices will go down rose to 8 percent.
• The share of respondents who say mortgage rates will go up in the next 12 months increased to 52 percent.
• Those who say it is a good time to buy a house fell slightly to 66.0 percent, while those who say it is a good time to sell rose to 46.0 percent – a new survey high.
• The average 12-month rental price change expectation remained at 4.0 percent.
• The percentage of respondents who expect home rental prices to go up rose to 53.0 percent.
• Those who think it would be easy to get a home mortgage fell by 4 percentage points to 50.0 percent, while those who think it would be difficult rose by 3 percentage points to 46.0 percent.
• The share who say they would buy if they were going to move fell 5 percentage points to 60.0 percent – a new survey low, while the share who would rent rose to 34 percent.

The Economy and Household Finances

• The share of respondents who say the economy is on the right track decreased by 4 percentage points to 43.0 percent, while those who say the economy is on the wrong track rose by 3 percentage points to 48.0 percent.
• The percentage of respondents who expect their personal financial situation to get better over the next 12 months fell to 41.0 percent.
• The share of respondents who say their household income is significantly higher than it was 12 months ago fell 2 percentage points to 22.0 percent.
• The share of respondents who say their household expenses are significantly higher than they were 12 months ago rose by 4 percentage points back to 35.0 percent.

The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey^™ polled 1,000 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). To reflect the growing share of households with a cell phone but no landline, the National Housing Survey has increased its cell phone dialing rate to 60 percent as of October 2014. For more information, please see the Technical Notes. 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 March 2015 survey, as well as 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 March 2015 National Housing Survey was conducted between March 1, 2015 and March 23, 2015. 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.