Despite lackluster consumer confidence, the number of employed consumers who expressed concerns about losing their job dropped to an all-time low in June, pushing more potential buyers into the purchase market, according to a recent industry survey.
Fannie Mae’s June National Housing Survey said that this could in turn help offset some of the weakness in sales activity.
“Since we began collecting monthly National Housing Survey data in June 2010, we’ve seen substantial progress in consumer home price expectations and other key attitudinal measures as the housing recovery gained its footing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
However, the economy still has a long way to travel. “We do not expect to see ‘normal’ levels of new residential construction, in the region of 1.6 million new housing units per year, before the end of 2016, our original projection. Such a feat would require a pace of growth in housing starts not seen in decades,” Duncan said.
The survey, which polled 1,000 Americans, reported mostly flat numbers for the housing market due to a more subdued and slow recovery.
On average, consumers’ 12-month home price change expectation stayed positive in June at 2.4%, but fell slightly from the previous few months, largely attributable to an uneventful housing market for the first half of the year.
The share of the percentage of respondents who expect mortgage rates to go up in the next year increased six percentage points to 55% in June, following a gradual decrease since February.
“The uptick this month in the share of consumers expecting mortgage rates to go up and the accompanying decline in home price expectations reflect the pause of activity in the housing market so far this year,” said Duncan.
“Despite recent improvement, we now expect an annual decline in existing home sales due to weak volume in the first four months of the year associated with the rise in mortgage rates mid-last year and the current dearth of supply of lower-priced homes,” he added.