Americans Not Deterred by Rising Mortgage Interest Rates
Consumer attitudes toward the housing market are increasingly positive despite the recent rise in mortgage interest rates, according to results from Fannie Mae’s July 2013 National Housing Survey. The share of respondents who believe interest rates will go up over the next year increased another 5 percentage points to 62 percent, the highest level in the survey’s three-year history. Consumers also expect home prices to climb 3.9 percent on average over the next 12 months, holding steady from the May and June survey results. At the same time, the share of respondents who say it is a good time to buy a house increased to 74 percent, while the share who say it’s a good time to sell a house increased to 40 percent, matching the survey high.
“Consumers have taken the interest rate rise in stride. Expectations for continued improvement in housing persist, and sentiment toward the current buying and selling environment is back on track from its dip last month,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “These results are consistent with our own analysis of previous housing cycles, which finds that interest rates and home prices are not strongly correlated.”
Homeownership and Renting
• At 3.9 percent, the average 12-month home price change expectation increased slightly to match May 2013’s survey high.
• The share of people who say home prices will go up in the next 12 months fell four percentage points from June’s survey high to 53 percent, while those who say home prices will go down reached a survey low of 6 percent.
• The share of respondents who say mortgage rates will go up in the next 12 months jumped five percentage points to 62 percent, the highest level since the survey’s inception.
• The share who says it is a good time to buy a house increased slightly to 74 percent, and those who say it is a good time to sell a house increased four percentage points to 40 percent.
• The average 12-month rental price expectation fell to 4.2 percent, a 0.4 percent decrease from last month.
• Fifty-four percent of those surveyed say home rental prices will go up in the next 12 months, a two percentage point decrease from June’s survey high.
• Forty-five percent of respondents think it would be easy for them to get a home mortgage today, a 2 percentage point decrease from last month.
• The share of respondents who said they would buy if they were going to move decreased slightly to 64 percent.
The Economy and Household Finances
• At 40 percent, the share of respondents who say the economy is on the right track increased two percentage points from June.
• The share of people who expect their personal financial situation to get better over the next 12 months fell three percentage points to 43 percent.
• The share of respondents who say their household income is significantly higher than it was 12 months ago remained steady at the survey high of 26 percent.
• At 30 percent, the share of respondents who say their household expenses are significantly higher than they were 12 months ago fell six percentage points from last month.
Source: Fannie Mae
Reprinted with permission from RISMedia. ©2013. All rights reserved.