Consumers are slightly more optimistic about homeownership prospects, but remain tainted by volatile energy prices, rising household expenses and a general lack of confidence in the overall economy, Fannie Mae reported in its latest national housing survey. While nearly three-fifths of those surveyed still view homeownership as an investment opportunity, many underwater homeowners now believe walking away from a mortgage is OK in times of financial distress. That finding was made when Fannie Mae researchers compared survey answers from this year to those given in January 2010. The willingness of borrowers to walk away is a distressing sign for Fannie's economics team. "It will put more downward pressure on prices if people start walking away, and it will create greater losses for lenders," said Doug Duncan, vice president and chief economist of Fannie Mae. "When a loan cannot get back to performance, the losses are greater." Duncan said there is a silver lining in that consumers generally believe the housing market has either touched bottom or is about to touch bottom. But broader economic headwinds are dampening the outlook for potential homebuyers. According to the survey, only 33% of Americans believe the economy is on the right track, four percentage points higher than fourth-quarter findings, but unchanged from January. Consumers also are reluctant to splurge on attractively priced homes, as 44% say their current monthly household expenses are significantly higher than 12 months ago. Nearly one-third of respondents expect home prices to strengthen over the next year, up four percentage points from the fourth quarter, but virtually unchanged from a year ago. From a generational standpoint, 59% of Americans aged 18 to 34 expect their financial situations to improve over the course of the next year, which is potentially good news considering most first-time homebuyers come from this age group. That compares to 49% of Americans 35 to 44 and 37% of those 45 to 64 years old. Duncan said the most troubling fact facing recovery in the housing industry "now is on the demand side of the equation." The new generation of buyers is unlikely to turn to homeownership when energy costs and other rising prices are eating into their take-home pay and unemployment remains high. "There has to be continued employment growth for there to be a strengthening in housing," Duncan said. "We expect it will be harder to get credit in the future and banks still have not loosened their underwriting standards. While we have seen indications of increased optimism since December, consumers’ attitudes improved only marginally, and in some areas not at all, from a year ago, reflecting the continued unevenness and uncertainty of this recovery." Write to: Kerri Panchuk.