Politics & MoneyReal Estate

Fannie Mae survey highlights the dichotomy of housing

Housing analysts continue to spar over the extent and power of the housing recovery, and many Americans remain relatively strong in their belief that the market will continue to brighten.

Respondents to Fannie Mae’s July National Housing Survey, a telephone survey of 1,002 renters and homeowners in the nation, said they expect home prices to escalate 1.7% in the next 12 months, down slightly from the survey high of 2% recorded in June. And 11% of respondents — the lowest level seen since the survey began in June 2010 — believe home prices will drop in the next year.

In the highest level seen since the survey’s inception, 16% of consumers say it is a good time to sell. The percentage of respondents who say it is a good time to buy has held steady at 73%.

Fannie Mae Chief Economist Doug Duncan recognized that consumers’ attitudes about their household finances remain cautious and continue to show signs of job worries and financial stress.

“However, it is encouraging to see that consumer expectations regarding housing largely continue to be upbeat,” Duncan said. “The recent July jobs report showing the strongest nonfarm payroll gain in five months should help to ease consumers’ fear that the economic expansion is faltering. Improvement in the labor market, if sustained, would help bolster the upward trend of consumer attitudes toward housing, which so far has been a glimmer of light amid a dimming economic outlook.”

Mortgage data and technology services firm CoreLogic (CLGX) reported Tuesday that home prices, including distressed sales, appreciated annualy by 2.5% in the month of June, the fourth consecutive month of year-over-year value gains.

“While first-half gains have given way to second-half declines over the past three years, we see encouraging signs that modest price gains are supportable across the country in the second-half of 2012,” CoreLogic Chief Executive Anand Nallathambi said.

A point of dispute

Consumers appear to hold a certain amount of optimism toward housing, but some analysts and investors disagree on the direction of the market’s movement. Joseph LaVorgna, housing analyst at Deutsche Bank, said the housing market is converting into a tailwind for the broader economy as construction activity gains momentum at a double-digit pace and home prices finally rise.

LaVorgna makes this claim despite the recent hiccup in home sales, which declined 8.4% to 350,000 units in June, down from a revised rate of 382,000 the previous month, according to a new report from the U.S. Census Bureau and the Department of Housing and Urban Development.

But over the 12-month period ending in May, home prices rose 3.7%, the Federal Housing Finance Agency said in its latest monthly House Price Index. Home prices grew a slight 0.8% from April to May, showing some signs of stability in the housing market.

LaVorgna cites the elevation of home prices across the nation as a factor in the housing markets headwind reversal. However, Standard & Poor’s says to expect more price dips by year-end.

“We expect these drops to occur in tandem with new foreclosed properties reaching the market later this year,” S&P credit analyst Erkan Erturk says. “The U.S. economy is currently growing at too slow a pace to have an impact on the housing market, and we believe that certain economic factors, such as weak employment growth and the Euro debt crisis, could somewhat stymie the housing recovery.”

Despite Fannie Mae’s findings and other reports about home prices stabilizing or slightly increasing, only a third of mortgage bond investors interviewed by JPMorgan Securities expect significant home price growth in the near future. 

A recent review of the seven major home price indices shows that five of them found that values dipped or remained constant over the 12-month period ending in March.

Other Fannie findings

The Fannie Mae July survey also revealed that 25% of employed respondents are concerned about losing their job in the next 12 months, up 3% points since June.

The share of respondents who said the economy is on the right track dipped again to 35%, following the highest point recorded in May. And 15% of Americans polled expect their personal financial situation to get worse, the highest level recorded since January, while those who expect their personal financial situation to improve remained at 43%.

A Freddie Mac survey showed the 30-year, fixed-rate mortgage averaged 3.55% last week, up from the prior week’s record low of 3.49%. Before then, the average rate on the 30-year FRM fell to or matched record-low levels in 13 of the past 14 weeks.

The percentage of respondents who say mortgage rates will go up in the next 12 months declined five points since May to 36%, according to the Fannie Mae survey.



3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please