Consumer Housing Sentiment Loses Momentum as Income Growth Remains Stagnant

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News Release

September 08, 2014

Consumer Housing Sentiment Loses Momentum as Income Growth Remains Stagnant

Indicators Support Forecast that Gradual Housing Recovery Will Continue into 2015

Katie Penote

202-752-2261

WASHINGTON, DC – Americans’ attitudes toward the housing market continued to soften in August and suggest that housing activity may resume its modest recovery in 2015 after some pullback this year, according to results from Fannie Mae’s August 2014 National Housing Survey. Despite ongoing improvements in the labor market this year, consumers’ view on their income trend during the past 12 months appears to be more bearish. In addition, the share of consumers who said now is a good time to buy a home dipped for the second consecutive month, falling six percentage points since June to 64 percent – tying the all-time survey low.

"The August National Housing Survey results lend support to our forecast that 2015 will likely not be a breakout year for housing," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The deterioration in consumer attitudes about the current home buying environment reflects a shift away from record home purchase affordability without enough momentum in consumer personal financial sentiment to compensate for it. To date, this year’s labor market strength has not translated into sufficient income gains to inspire confidence among consumers to purchase a home, even in the current favorable interest rate environment. Our third quarter Mortgage Lender Sentiment Survey results, to be released later this month, are expected to show whether mortgage demand from the lender perspective is in line with consumer housing sentiment."

SURVEY HIGHLIGHTS

Homeownership and Renting

  • The average 12-month home price change expectation fell to 2.1 percent.
  • The share of respondents who say home prices will go up in the next 12 months held steady at 42 percent. The share who say home prices will go down increased to 9.0 percent.
  • The share of respondents who say mortgage rates will go up in the next 12 months fell by four percentage points to 50 percent.
  • Those who say it is a good time to buy a house fell to 64 percent, matching the all-time low. Those who say it is a good time to sell also decreased—to 38 percent.
  • The average 12-month rental price change expectation rose to 4.1 percent.
  • The percentage of respondents who expect home rental prices to go up in the next 12 months increased to 53 percent.
  • The share of respondents who think it would be easy to get a home mortgage today increased by one percentage point.
  • The share who say they would buy if they were going to move fell to 64 percent, while the share who would rent increased to 32 percent—the narrowest gap in over a year.

The Economy and Household Finances

  • The share of respondents who say the economy is on the wrong track fell by three percentage points from last month to 56 percent.
  • The percentage of respondents who expect their personal financial situation to get better over the next 12 months increased to 44 percent.
  • The share of respondents who say their household income is significantly higher than it was 12 months ago dropped by five percentage points to 23 percent.
  • The share of respondents who say their household expenses are significantly higher than they were 12 months ago remained at 36 percent.

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 August 2014 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 August 2014 Fannie Mae National Housing Survey was conducted between August 1, 2014 and August 24, 2014. 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.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

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