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September 12th, 2013

Consumers understand the housing market’s direction

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Consumers are “well-attuned” to the direction of the U.S. housing market, judging by attitudes they expressed in a Fannie Mae survey in August.

Home prices

Consumers said they expected home prices to grow 3.4 percent, on average, during the next 12 months, a pace expectation that slowed 0.5 percent compared with July.

The proportion of consumers who said prices would rise increased to 55 percent while the proportion who said prices would fall increased slightly to 7 percent.

Mortgage rates

The proportion of consumers who said they thought mortgage rates would go up in the next 12 months dropped to 58 percent, a decrease of 2 percent compared with July’s survey high of 60 percent.

Perceptions that housing growth had hit a plateau, despite trending upward earlier this year, were likely due to concerns about the effect of the Federal Reserve’s intentions to “taper off” its purchases of mortgage assets, Fannie Mae said.

Consumer moods tied to mortgage rates

In a statement, Fannie Mae Chief Economist Doug Duncan said the rise in mortgage rates associated with the possibility that the Fed will begin to wind down its asset purchase program in September dampened consumer sentiment toward housing.

“The pause in positive momentum is consistent with slowing trends in home purchase contract signings and mortgage applications. Interest rate volatility will likely remain elevated, even after we have more clarity on the pace of the Fed’s tapering, due to concerns over the upcoming budget and debt ceiling debates as well as the crisis in Syria,” Duncan said.

Is now a good time to buy or sell?

The survey also found that the share of consumers who said the present was a good time to buy a house decreased to 71 percent, a drop of 3 percent compared with July. The proportion who said the present was a good time to sell decreased to 36 percent, a drop of 4 percent compared with July.

Forty-six percent of respondents said they thought it would be easy for them to get a home mortgage, a slight increase compared with July.

The share of respondents who said they would buy if they were going to move increased slightly to 65 percent.

The Fannie Mae survey polled 1,001 people via live telephone interview to assess their attitudes toward owning a home. Homeowners and renters were asked more than 100 questions used to track attitudinal shifts. Most of the data was collected in the first two weeks of August. The survey is conducted monthly.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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