Consumer Concerns Regarding Economy Slow Housing Activity
Spring-Summer Buying and Selling Season Sputters Despite Drop in Mortgage Rates
WASHINGTON, DC – Americans’ concerns about the direction of the economy and their household income appear to be weighing on housing growth, according to results from Fannie Mae’s May 2014 National Housing Survey. The share of respondents who believe the economy is headed in the wrong direction remained at 57 percent last month, and those who said their household income is significantly higher than it was at the same time last year decreased four percentage points to 21 percent. Although respondents’ attitudes toward housing have been generally positive during the past few months, their reluctance to enter the home buying or selling market has restrained activity below typical seasonal trends.
"Consumers’ lukewarm income expectations and reticence about the economy seem to be holding back housing demand," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "This year’s spring and summer home buying season has gotten off to a slow start, even as mortgage rates have trended lower over the past two months. Our National Housing Survey data show that economic conditions continue to be the top concern among consumers who think it’s a bad time to buy or sell a home. While recent housing activity suggests that the worst of the housing slump may be behind us, this caution among consumers supports our expectation that the rebound in home sales will likely be too modest to pull sales for all of 2014 ahead of last year."
Homeownership and Renting
- The average 12-month home price change expectation remained unchanged from last month, at 2.9 percent.
- The share of respondents who say home prices will go up in the next 12 months fell to 48 percent, and the share who say home prices will go down increased to 7 percent.
- The share of respondents who say mortgage rates will go up in the next 12 months continued on a downward trend, dropping to 49 percent.
- Those who say it is a good time to buy a house fell slightly to 68 percent, and those who say it is a good time to sell a house increased to 43 percent, a new all-time survey high.
- The average 12-month rental price change expectation decreased slightly to 3.9 percent.
- Fifty-one percent of those surveyed said home rental prices will go up in the next 12 months, while 3 percent of respondents said home prices will go down.
- Forty-nine percent of respondents thought it would be easy for them to get a home mortgage today, rising 4 percentage points from last month.
- The share who say they would buy if they were going to move increased slightly to 66 percent.
The Economy and Household Finances
- The share of respondents who say the economy is on the right track increased 3 percentage points from last month to 38 percent.
- The percentage of respondents who expect their personal financial situation to get better over the next 12 months fell slightly to 42 percent.
- The share of respondents who say their household income is significantly higher than it was 12 months ago decreased 4 percentage points to 21 percent.
- The share of respondents who say their household expenses are significantly higher than they were 12 months ago decreased 5 percentage points to 34 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 May 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 May 2014 Fannie Mae National Housing Survey was conducted between May 1, 2014 and May 21, 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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