An increase in housing supply in a seller’s market, combined with rising rental costs, are encouraging potential homebuyers to leave the sidelines, according to Fannie Mae’s monthly housing survey.
The government-sponsored enterprise’s June 2015 National Housing Survey polled 1,000 Americans via live telephone interview between June 1 and June 23 to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances and overall consumer confidence. Fannie Mae asked participants more than 100 questions to track attitudinal shifts.
According to the survey, 52 percent of respondents feel now is a good time to sell a home — crossing the 50-percent threshold for the first time in the survey’s history. Last month, 49 percent of respondents expressed that sentiment.
Respondents’ average 12-month home price change expectation fell to 2.6 percent, and the share of respondents who believe home prices will go up in the next 12 months fell to 47 percent. And the share of respondents who think home prices will go down rose to 7 percent.
In contrast, those who said it is a good time to buy a house fell to 63 percent. The share of respondents who say mortgage rates will go up in the next 12 months rose 3 percentage points to 50 percent. Those who think it would be easy to get a home mortgage remained at 50 percent, while those who think it would be difficult remained at 46 percent.
Meanwhile, 59 percent of respondents said they expect home rental prices to increase in the next year — also an all-time survey high and an increase of 4 percent over the previous month’s assessment. Sixty-four percent of respondents, or 2 percent less than last month, said they would buy a home the next time they moved, while the share who said they would rent increased to 34 percent.
What influenced these responses? According to Doug Duncan, senior vice president and chief economist at Fannie Mae, it was the positive impact on housing of job and income growth. The share of respondents who think economy is on the right track increased by 1 percentage point to 39 percent, while those who say the economy is on the wrong track fell by 1 percentage point to 51 percent.
The survey’s participants also seem to have more confidence in their own personal financial situations. The percentage of respondents who expect their personal financial situation to get worse over the next 12 months fell back to 10 percent — tying a survey low.
“The expectation of higher rents is a natural outgrowth of increasing household formation by newly employed individuals putting upward pressure on rental rates,” Duncan said.
“A complementary rise in the good time to sell measure suggests that limited inventory, which is putting upward pressure on house prices, gives an increasing advantage to sellers. Together, these results point to a healthier home purchase market, with more renters likely to find owning to be more cost-effective than renting and more sellers likely to put their homes on the market.”
However, in line with other economists’ current assessments, many respondents said their household expenses are significantly higher than they were at this time last year, and the share of those who reported that their household income is significantly higher than it was a year ago fell 1 percentage point to 27 percent.
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