After consumer confidence in housing plunged to an all-time low in October, consumers continued to register serious doubts about the housing markets recovery even though consumer confidence overall rebounded as the year ended.
In Fannie Mae’s October 2013 National Housing Survey. Consumer confidence in the housing market plunged to an all-time low last month in the wake of the government shutdown. Only 65 percent said it’s a good time to buy a house and less than half (46 percent) said they believed home prices will rise in the 12 months to come, down six points from September.
In November, consumers’ home price expectations continued to decline. The share who said prices are going to increase within the next 12 months fell to 45 percent and the average home price change expectation dipped to 2.5 percent from 2.9 percent. In addition, the share of those who expect mortgage rates to climb in the next 12 months has remained at an elevated level since it spiked in June.
“Our November National Housing Survey results show a loss of momentum in expectations for home prices and personal finances. Also, the majority of consumers expecting higher mortgage rates implies a slowing of housing market momentum. As the economy continues to improve and household balance sheets for most Americans are slow to repair, we continue to see the transition to a full housing recovery as a slow process. Upcoming fiscal policy discussions and labor market developments may also lead to some bumps along the way,” said Fannie Mae’s Chief Economist Doug Duncan.
Now there’s new evidence that consumers remain sour on housing even as confidence in the overall economy improved dramatically in December. The Conference Board Consumer Confidence Index®, which had decreased in November, rebounded in December, rising to 78.1 (1985=100), up from 72.0 in November. The Present Situation Index increased to 76.2 from 73.5. The Expectations Index increased to 79.4 from 71.1 last month.
Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence rebounded in December and is now close to pre-government shutdown levels (September 2013, 80.2). Sentiment regarding current conditions increased to a 5 ½ year high (April 2008, 81.9), with consumers attributing the improvement to more favorable economic and labor market conditions. Looking ahead, consumers expressed a greater degree of confidence in future economic and job prospects, but were moderately more pessimistic about their earnings prospects. Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began.”
However, consumer attitudes towards housing apparently haven’t budged since November despite continued reports of strong price gains declining levels of negative equity.
The data releases provided more evidence of strength in the U.S. economy, which appears to have overcome headwinds caused by an autumn government shutdown, higher taxes and rising mortgage rates.
A new Rasmussen Report based on a survey taken December 19-20 found that just over half of Americans think buying a home is a family’s best investment, but confidence that now is a good time to sell where they live has fallen to its lowest level in several months.
The survey found that just 29 percent of American adults say now is a good time for someone in their area to sell a house. That’s down from 32 percent last month and from 39 percent in September, the highest finding in regular surveying since April 2009. It’s the most pessimistic finding since March. Forty-three percent (43 percent) disagree and say now is not a good time to sell, while 27 percent are not sure.