Consumers are living in a bipolar world, where optimism about housing is on the rise even as Americans remain wary of the economy as a whole.

As home prices and demand rise in certain housing markets, consumers are growing more positive. On the other hand, automatic spending cuts are now dampening consumer sentiment about household finances and the economy, Fannie Mae said in its February National Housing Survey.

Consumers on average expect home prices to rise 2.9% over the next 12 months, the highest reported increase in confidence since the survey’s inception in June 2010 and a 0.5% increase over the previous month.In contrast, the number of consumers who expect their personal finances to improve fell two percentage points to 41%.

“Despite fiscal headwinds and political uncertainty, consumer sentiment toward housing is robust and continues to gather strength,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

The share of consumers who believe home prices will tick up over the next year hit a record high of 48%, while the share of consumers who believe home prices will go down held steady at 10%. Additionally, about 50% of consumers said home prices will go up over the next 12 months, the survey noted.

“We expect home prices to firm further amid a durable housing recovery, gradually reducing the population of underwater borrowers and helping to boost the share of consumers who say that now is a good time to sell,” Duncan said.

The survey also reported that 45% of consumers believe mortgage rates will rise in 2013, reaching the highest level since August 2011.

“Since reaching its trough last September, the share of consumers expecting mortgage rates to rise has trended up,” Duncan added.

He said, “However, despite historically low mortgage rates, nearly half of borrowers have never refinanced their mortgage. Combined with the scheduled year-end HARP deadline, rising rate expectations should prompt some borrowers to refinance soon to take advantage of more favorable mortgage terms and add to their disposable income, helping to offset ongoing fiscal drag.” 

Meanwhile, 25% of consumers noted it’s a good time to sell a house, the highest level since the survey’s inception, the results reported.

The average 12-month rental price change expectation also increased 0.2% to 3.9% in February. 

The Fannie Mae National Housing Survey polled 1,008 Americans to assess their attitudes towards homeownership and the overall real estate market.

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