Fannie Mae survey shows Americans expect home prices to improve
A majority of Americans believe mortgage rates will remain steady over the next year, while home price expectations in January improved for the fourth consecutive month in a row, Fannie Mae said in its consumer sentiment report.
The government-sponsored enterprise interviews 1,000 Americans each month to gauge consumer expectations about housing and the overall economy.
A majority of respondents expect home prices to rise by at least 1% on average over the course of the next 12 months.
"Consumer sentiment has continued to rebound to the level witnessed around a year ago since hitting a setback last summer," said Doug Duncan, vice president and chief economist of Fannie Mae. "The strengthening employment picture last Friday provides encouragement that the improving trend in consumer confidence will continue and will at some point be reflected in a firming up of consumer spending."
Duncan said the Federal Reserve's commitment to keeping the target fed funds rates low through 2014 has spurred a general sense of confidence that interest rates will remain in the bottom range for a while.
Only 28% of those interviewed expect home prices to increase over the next 12 months, while 16% said they believe home prices will fall. Another 51% believe prices will stay the same.
Of those interviewed, 71% believe now is a good time to buy a home, while only 10% think it's a good time to sell. Consumers also expect rental prices to rise by 3.2% over the course of the next 12 months, and 17% said their income levels are lower than a year ago, while 62% say it's unchanged.
Homeownership still maintains a premium value among those surveyed with 64% saying they expect to buy a home, while 30% will rent.