RealEstateEconomyWatch.com

Consumers don’t plan to buy homes anytime soon because they think prices will fall farther next year, mortgage rates will stay low for a long time and they’re very worried about their personal financial situation.

Just in time for the Halloween season, that’s the frightening takeaway from the latest Fannie Mae National Housing Survey, which offered few glimmers of hope and some scary realities for the housing industry.

Some highlights…or low lights:

• Only one out of three consumers think that mortgage rates will go up in the next 12 months (down 12 percentage points since August).

• For the fourth month in a row, Americans expect home prices to decline over the next year. On average, Americans expect home prices to go down by 1.1 percent, the highest expected decline to date.

• Only 18 percent of respondents expect home prices to increase over the next 12 months (the lowest reported number to date in the National Housing Survey), while 25 percent say they expect home prices to decline (down by 2 percentage points since August).

• While 68 percent of Americans say it is a good time to buy a home (down 1 percentage point since last month), only 10 percent of those polled say it is a good time to sell one’s home (up by 1 percentage point since August).

• On average, Americans expect home rental prices to go up by 3.3 percent over the next year, down slightly from the expected increase of 3.5 percent observed in August.

• Despite continued consumer caution about taking on a large financial obligation to buy a home, 63 percent say they would buy their next home if they were going to move (up by 1 percentage point since August), while 32 percent of Americans say they would rent their next home (down 2 percentage points since last month).

“The September survey showed a marked deterioration in consumer expectations of home prices over the next year-their weakest outlook since monthly tracking began in June 2010,” said Doug Duncan, vice president and chief economist of Fannie Mae. “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. 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.”

“The lack of a sense of urgency to buy homes, given expectations for further declines in home prices and continued low mortgage rates, coupled with general pessimism regarding their own personal finances and the economy, bodes poorly for the recovery of the housing market,” Duncan stated.