WASHINGTON – Nov. 9, 2012 – Americans show growing confidence that home prices will increase over the next 12 months, according to results from Fannie Mae’s October 2012 National Housing Survey.
At the same time, consumers expect an even higher surge in rental prices, suggesting that more renters may be motivated to jump into the real estate market in the coming months, survey authors say.
“This has been a year of steady growth in the percentage of consumers with positive home price expectations,” says Doug Duncan, senior vice president and chief economist of Fannie Mae. “Increasing household formation, encouraged by an improving labor market, is adding additional momentum to the housing recovery and putting upward pressure on rental price expectations. Expected increases in both owning and renting costs may encourage more consumers to buy and add further strength to the housing recovery already under way.”
In October, survey respondents, on average, expected home prices to increase 1.7 percent in the next 12 months. The share who said home prices will decrease in the next year dropped to 10 percent – 13 percentage points lower than October 2011 and the lowest level since the survey’s inception in June 2010.
The percentage of respondents who believe mortgage rates will go up climbed 4 percentage points to 37 percent following a steep drop in September. Respondents’ average rental price expectation jumped by 0.8 percent to 3.9 percent, and 50 percent believe home rental prices will rise in the next year – a 3 percentage point increase over last month and the highest level since the survey began.
Homeownership and renting
• Consumers’ average home price change expectation edged up slightly to 1.7 percent.
• Ten percent of those surveyed say that home prices will go down in the next 12 months, a 13 percentage point decrease since October 2011.
• After a sharp drop last month, the percentage who think mortgage rates will go up rose 4 percentage points in October to 37 percent.
• 72 percent of respondents say it’s a good time to buy, while 18 percent say it’s a good time to sell.
• The average rental price expectation increased by 0.8 percent to 3.9 percent.
• 50 percent said home rental prices will go up in the next 12 months, a 3-percentage point rise over last month.
The economy and household finances
• The percentage who expect their personal financial situation to get better over the next 12 months remained level at 43 percent.
• 19 percent of respondents said their household income is significantly higher than it was 12 months ago, a slight increase from last month’s total of 17 percent.
• Household expenses remained stable over the past month, with 56 percent responding that their household expenses stayed the same compared to 12 months ago.
© 2012 Florida Realtors®