Americans believe home prices will drop another 1.1% over the next year while mortgage rates maintain record low levels, Fannie Mae
said in its September national housing survey.
Chief Economist Doug Duncan said the September survey showed a marked deterioration in consumer expectations for home prices, making it the weakest month on record over the last 18 months.
"Despite a decline in negative economic headlines during September — in contrast to their ubiquity during the debt ceiling debate in August — consumers continue to demonstrate very negative attitudes," Duncan said. "At the same time, the share of consumers expecting mortgage rates to go up dropped sharply to the lowest level we have recorded, likely influenced by the news that the Federal Reserve
will attempt to keep interest rates low for years to come. All these factors together do not bode well for the housing market."
In fact, pessimism abounds in the housing market, with one-third of respondents expecting mortgage rates to go up in the next year. And for the fourth consecutive month, most Americans taking the Fannie survey said they expect home prices to decline from year-ago levels.
About 68% of those surveyed said it's a good time to buy a home, while only 10% believe it's a good time to sell a house.
Write to Kerri Panchuk