November 07, 2013Government Shutdown and Debt Ceiling Debate a Real Downer on Consumer Economic and Housing Sentiment
WASHINGTON, DC – The recent U.S. federal government shutdown and the ongoing debt ceiling debate appear to have taken a toll on Americans’ outlook toward the economy and housing market, according to the Fannie Mae October 2013 National Housing Survey results. As the survey is conducted generally during the first three weeks of each month, the majority of respondents in October were surveyed during the government shutdown. Notably, the gap between the share of consumers who said the economy is on the wrong track and those who said it's on the right track widened from 16 percentage points in September to 40 percentage points in October – a record month-over-month change since the survey’s inception in 2010.
With regard to housing, the share of consumers who say it's a good time to buy a house declined to 65 percent – also an all-time survey low – and the share who say mortgage rates will go up in the next year fell 6 percentage points to 57 percent. However, while Americans’ housing sentiment may continue to slow during the next few months as the debt ceiling debate ramps up, it is not expected to derail the gradual healing in the housing market.
“Housing market sentiment has clearly suffered in the wake of the recent government shutdown and debt ceiling debate,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “In October, we saw attitudes toward both the economy and the current buying environment experience their largest one-month drops in the survey’s three-year history. While this decline in consumer optimism may portend a slowing of the housing recovery, supply constraint data suggest that we are likely to see continued positive growth in home prices. That being said, October’s survey results suggest that consumer attitudes are highly responsive to ongoing debate and decision-making in Washington. Three key budget and debt ceiling dates loom in December, January, and February. The handling of each will likely play a key role in determining the pace and timing of any recovery in consumer sentiment.”
Homeownership and Renting
The Economy and Household Finances
The most detailed consumer attitudinal survey of its kind, the Fannie Mae 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). 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 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 October 2013 Fannie Mae National Housing Survey was conducted between October 1, 2013 and October 22, 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.