Consumer sentiment over the trajectory of home prices rose in November as improved economic data pushed home price expectations into positive territory for the first time in six months, Fannie Mae said in its November National Housing Survey.
According to the report, more respondents expect home prices to increase by at least 0.2% over the next year. However, nearly a quarter of those surveyed expect house prices to keep going down.
Most consumers are primarily optimistic though cautious, with many of the surveyed respondents in a “wait and see” pattern, Fannie concluded.
“Though their home price expectations have become slightly positive, consumers remain concerned about the direction of the economy and continue to view their household finances as being relatively flat,” said Doug Duncan, chief economist of Fannie Mae.
“Most Americans expect no improvement in their personal financial situation in the next 12 months and will likely remain wary about undertaking the significant financial obligation associated with homeownership until their view of their income, expenses, and job security heads in a more positive direction.”
Out of the respondents interviewed for the survey, 22% expect home prices to increase this next year, while 53% expect prices to stay the same. Another 22% expect prices to decline. The percentage of those who are optimistic about home prices rose 3 percentage points from last month, suggesting a turnaround in market sentiment.
Sixty-eight respondents believe now is a good time to buy a home and 33% say mortgage rates will go up over the next year. Rental prices also are projected to increase, with the average rental price expected to increase another 3.2% next year.
Despite some positive news, consumers are hesitant to be overly confident. About 75% of those interviewed said the economy is off on the wrong track. While that is down 2 percentage points from October, it’s still well above 50%. Only 16% of those interviewed believe the economy is on the right track. 66% reported the same income levels, and about 16% of the surveyed group reported an increase in household income. 18% said they are now receiving less income.
Write to Kerri Panchuk.
