Consumers In Cautionary Holding Pattern Amid Fiscal Policy Debate

Posted by Patrick Barnard on October 07, 2013 No Comments
Categories : Residential Mortgage

Americans tempered their optimism toward the housing market in September, perhaps indicating growing caution surrounding the fiscal policy debate, according to Fannie Mae.

The Fannie Mae September 2013 National Housing Survey shows that although consumers continue to remain positive, their attitudes around housing have reached a plateau or decreased during the past three months. Notably, Fannie Mae says the September survey results may not have revealed the full effect of the shutdown on Oct. 1 and the pending debt ceiling debate, which will likely become more apparent in October and the coming months.

‘Our September National Housing Survey results show that the improvements in consumer housing attitudes witnessed in recent months softened ahead of the government shutdown,’ notes Doug Duncan, senior vice president and chief economist for Fannie Mae. "Americans' awareness of policy uncertainty leading up to the Oct. 1 shutdown and the pending debt ceiling debate appears to have grown as indicated by an apparent cautionary holding pattern in overall consumer housing and personal finance sentiment.

‘How and when these fiscal policy issues are addressed could impact consumer attitudes in October and beyond, and influence the fragile economic and housing recovery,’ Duncan continues. ‘Fifty-five percent of Americans continue to believe that the economy is on the wrong track, while 39 percent think the economy is on the right track. This gap narrowed to 16 percentage points in September. The gap could widen, depending on the outcome of the debt ceiling negotiations as the Treasury expects that the extraordinary measures to extend the nation's borrowing authority will be exhausted by Oct. 17."

Other highlights of the survey include the following:

– At 3.1%, the average 12-month home price change expectation continued to fall, decreasing 0.3% from last month.
– The share of people who say home prices will go up in the next 12 months fell by three percentage points to 52%, while those who say home prices will go down fell to match July's survey low at 6%.
– The share of respondents who say mortgage rates will go up in the next 12 months increased three percentage points from last month to a survey high of 63%.
– The share who say it is a good time to buy a house increased by one percentage point to 72%; those who say it is a good time to sell a house increased by two percentage points to 38%.
– The average 12-month rental price change expectation fell to 3.4%.
– Fifty-two percent of those surveyed say home rental prices will go up in the next 12 months – a slight decrease from August.
– Forty-seven percent of respondents think it would be easy for them to get a home mortgage today – a slight increase from last month. The share of respondents who said they would buy if they were going to move increased to a survey high of 69%.
– The share of people who expect their personal financial situation to get better over the next 12 months decreased to 42%.
– The share of respondents who say their household income is significantly higher than it was 12 months ago fell by one percentage point from August, to 22%.
– At 33%, the share of respondents who say their household expenses are significantly higher than they were 12 months ago rose one percentage point from last month.

To view more results of the survey, click here.

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