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November 13, 2012 1:28 am
Americans continue to show growing confidence in home price increases over the next 12 months, providing further indications of a slow but steady housing recovery, according to results from Fannie Mae's October 2012 National Housing Survey. Taken together with rental price expectations, which surged in October and remain much higher than home price expectations, more consumers may be motivated to purchase a home in the coming months.
"This has been a year of steady growth in the percentage of consumers with positive home price expectations," said Doug Duncan, senior vice president and chief economist of Fannie Mae. "Increasing household formation, encouraged by an improving labor market, is adding additional momentum to the housing recovery and putting upward pressure on rental price expectations. Expected increases in both owning and renting costs may encourage more consumers to buy and add further strength to the housing recovery already under way."
Continuing the positive upward trend seen over the past year, survey respondents expect home prices to increase an average of 1.7 percent in the next 12 months. The share who say home prices will decrease in the next year dropped to 10 percent – 13 percentage points lower than October 2011 and the lowest level since the survey's inception in June 2010.
Additionally, the positive difference between those saying home prices will go up and those saying they will go down remained steady at a survey high of 26 percentage points. The percentage who believe mortgage rates will go up climbed four percentage points to 37 percent following a steep drop in September. Returning to the July 2012 level, respondents' average rental price expectation jumped by 0.8 percent to 3.9 percent, and 50 percent believe home rental prices will rise in the next year – a three percentage point increase over last month and the highest level since the survey began.
When asked about the state of the economy, the share of respondents who say it's on the right track dropped to 38 percent, down three percentage points from last month. Conversely, those who say the economy is on the wrong track climbed three percentage points to 56 percent. The share of consumers who expect their personal financial situation to get better or stay the same over the next year remained essentially level at 43 percent and 40 percent, respectively.
Other highlights from the survey include:
Source: Fannie Mae
Published with permission from RISMedia.