Consumers are increasingly likely to expect that home prices will grow in the next year, even as fewer believe that their personal finances will improve, according to data released Thursday by mortgage buyer Fannie Mae.
A record high share of respondents — 48% — said in February that they believe home prices will increase in the next 12 months, according to Fannie’s monthly housing survey. That share is up from 41% in January, and far higher than 27% in February 2012. The data go back to June 2010. Fannie FNMA polled 1,008 respondents between Feb. 2 and 21.
“Despite fiscal headwinds and political uncertainty, consumer sentiment toward housing is robust and continues to gather strength,” said Doug Duncan, chief economist at Fannie Mae. “We expect home prices to firm further amid a durable housing recovery, gradually reducing the population of underwater borrowers and helping to boost the share of consumers who say that now is a good time to sell.”
However, fewer consumers expect that their personal financial situation will improve over the next 12 months, and there was a decline in the percentage of respondents who said the economy is on the “right track.” In February, 41% of consumers said they expect their personal finances to improve over the coming year, down from 43% in January, and below 45% in February 2012. Meanwhile, only 38% of respondents said in February that the economy is on the “right track,” down from 39% in January, but up from 35% in February 2012.
It’s unsurprising that consumers aren’t particularly cheery. Real weekly earnings have seen a lackluster performance over the past year, rising less than 1%, after adjusting for inflation. Meanwhile, the economy has continued to expand, but eked out a measly annual growth rate of 0.1% in the fourth quarter.
However, consumers’ cheerier outlook on home prices follows a year that saw large gains. Prices in December were up 6.8% from the same period in the prior year, the largest year-over-year gain since July 2006, according to the widely followed S&P/Case-Shiller index that tracks 20 major metropolitan regions. Despite that growth, prices remain 29% below a 2006 bubble peak.
Low inventories have exerted upward pressure on prices. Couple that trend with interest rates hovering near record lows and pent-up demand, and some areas have turned into sellers’ market. Still, the housing market’s recovery faces headwinds — unemployment remains high and fiscal uncertainty persists — and analysts say that another year of outsized-price growth may be unlikely in 2013. Read more about home prices.
No comments:
Post a Comment