First Phase of Housing Recovery Decelerates as Consumer Caution Continues
Americans' attitudes toward the housing market remain mixed, although a steady improvement in their personal financial outlook may bode well for housing in the coming months, according to results from Fannie Mae's July 2014 National Housing Survey.
"The continued cautious sentiment expressed across the range of consumer indicators this month gives weight to our view that the first phase of the housing recovery is decelerating, and 2014 will be a year of mixed housing outcomes with home prices rising more slowly and home sales falling slightly," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "We have always believed that for the housing recovery to be considered robust, we will need strong and sustained full-time job and income growth. Recent data indicating the creation of more than 200,000 jobs over each of the last six months, combined with this month's improvement in the share of consumers reporting significantly higher household income than a year ago, does provide some reason for optimism. If these trends continue, they could lead to some upside in housing in 2015.”
On average, consumers' 12-month home price change expectation dipped again in July, falling slightly to 2.3 percent, and the share of respondents who expect home prices to climb in the next year also continued on a downward trend, falling to 42 percent. Additionally, consumer attitudes about the direction of the economy overall have grown more negative – the share of respondents who believe the economy is on the wrong track increased by 5 percentage points from last month to 59 percent.
However, the gap has narrowed between the share of consumers who say now is a good time to buy a home versus those who say it is a good time to sell, indicating a better balance of supply and demand in the market. In addition, the share of consumers who say their home has increased in value since they bought it rose to an all-time survey high, which suggests a long-term positive trend for household balance sheets that may encourage more potential buyers and sellers to enter the market. Consumers' rising optimism about their personal financial situation also may foreshadow more positive housing sentiment. Those who say their income is significantly higher than it was 12 months ago increased 4 percentage points to a survey high of 28 percent, while those who say their personal financial situation has gotten worse within the last year declined to a survey low of 17 percent.
Fannie Mae's monthly national consumer attitudinal survey report provides indicators offering a window into the opinions of Americans across the country. These behavioral insights convey what consumers think about the outlook for owning and renting a home and about their household finances, and may serve as key inputs for determining the future course of investment across housing types.
On this webpage you will find a news release with highlights from the survey results, the July Data Release highlighting 12 consumer attitudinal indicators, a podcast containing highlights from this month’s survey, month-over-month key indicator data, technical notes providing in-depth information about the survey methodology, the questionnaire used for the survey, and a comparative assessment of the Fannie Mae National Housing Survey and other consumer surveys.