The 2013 National Housing Survey of Federal National Mortgage Association or Fannie Mae (OTCBB:FNMA) for the month of June showed that the sentiment of consumers to buy or sell a house declined by 4 percent.
Based on the survey, the percentage of respondents who believe that it is a good time to buy a house was 72 percent, down from 76 percent last May. The number of respondents who said it is a good time to sell a house also declined from 40 percent in May to 36 percent in June.
The survey also revealed that more Americans believed that mortgage rates and the prices of homes would increase. Fannie Mae/Federal National Mortgage Association (OTCBB:FNMA) suggested that potential home buyers are expected to enter the purchase market sooner than later.
The number of respondents who believe that mortgages rates would increase over the next 12 months was 57 percent, up by 11 percent from 46 percent in May while the number of consumers who said mortgage rates would go down declined from 5 percent to 4 percent. Thirty five percent of respondents believe that mortgage rates would stay the same, down from 44 percent in May.
Fannie Mae Expects Rising Rates to Create Buying Urgency; Consumers Disagree
The survey also found that consumers have a strong expectation that home prices would climb. Figures show that 57 percent of respondents believed that the prices of homes would go higher while only 4 percent of respondents a decline in home prices. Last May, 46 percent of respondents believed that home prices would go up and 5 percent expected home prices would go down.
Doug Duncan, senior vice president and chief economist at Fannie Mae – Federal National Mortgage Association (OTCBB:FNMA) commented, “The spike in mortgage rate expectations this month seems to have had an impact on a number of the survey’s indicators and may increase housing activity in the near term by driving urgency to buy.”
In addition, Duncan opined that consumers probably recognized that the existing mortgage rate is still favorable. He also believed that “homeownership affordability will recede over time.” He said, “Given rising home and rental price expectations and improving personal financial attitudes, more prospective homebuyers may be deciding that now is the time to get off the fence.”
Rents and Incomes Also Going Up
Fifty six percent (56%) of respondents expect that rental prices would increase next year. The highest level since Fannie Mae – Federal National Mortgage Association (OTCBB:FNMA) started the National Housing Survey. In May, the number of consumers who believed that rental prices would climb was 48 percent. The survey found that the average 12-month rental price-change expectation increased from 3.4 percent to 4.6 percent.
A higher percentage of Americans expect their personal financial situation would improve. The survey showed that 46 percent of respondents believed they would have a better personal financial situation compared with 41 percent in May. The percentage of people who believed their personal financial situation would be worse remained at 16 percent. The number of consumers who said their household income was higher than a year ago increased by 6 percent to 26 percent.