Favorable outlook holds steady in Fannie Mae housing survey

Indicators in Fannie Mae's National Housing Survey in January continued to reflect favorable views of the housing market, according to the latest results of the monthly poll. A majority of respondents also had positive feedback on the economy and expectations for their personal financial situation, despite a slight uptick in unemployment fears.

The Home Purchase Sentiment Index stood rose 1.3 points from December and 3.5 points from January 2019 to 93, just below a survey high of 93.8 set last year. This index is based on six factors in the monthly survey, including whether respondents think it is a good time to buy or sell a home, expected changes to mortgage rates and home prices in the next 12 months, concerns about unemployment, and changes in household income over the past year.

Doug Duncan, senior vice president and chief economist at Fannie Mae, said low mortgage rates have helped strengthen attitudes on the housing market. While 33 percent of respondents said they expect rates to increase in the next 12 months, this was down from 39 percent in the previous month and 59 percent in the previous year. Seven percent said they think rates will go down, unchanged from December and up 1 percentage point from January 2019.

"Low rates continue to be a key driver of consumer optimism about both current homebuying and home-selling conditions," said Duncan. "Favorable views on job security and personal financial expectations reflect the strength of the labor market, which we believe will continue to bolster housing demand."

Fifty-nine percent said they think it is a good time to buy a home, unchanged from the previous month but up 6 percentage points from the previous year. Thirty percent considered it a bad time to buy a home, down from 30 percent in January and 38 percent in January 2019.

Sixty percent said they think home rental prices will go up in the next 12 months, down 1 percentage point from the previous month but up 2 percentage points from the previous year. Only 3 percent said they think rents will decrease, down from 4 percent in December and 6 percent in January 2019. The average respondent expected that rents will increase by 4.6 percent, down from 4.8 percent in the previous month but up from 3.8 percent in the previous year.

Fifty-eight percent said they thought it would be easy to get a mortgage, unchanged from the previous month and up 3 percentage points from the previous year. Thirty-eight percent said they thought it would be difficult to qualify for a mortgage, down 2 percentage points from December and 4 percentage points from January 2019.

The share of respondents indicating that they would buy their next home if they were to move has fallen steadily in recent months, from 67 percent in November and 66 percent in December to 64 percent; this was also a year-over-year drop of 4 percentage points. The share of respondents indicating they would rent their next home increased from 27 percent in January 2019 and 28 percent in December to 32 percent.

Attitudes toward selling a home have stayed fairly consistent in recent years. Sixty-six percent thought it was a good time to sell a home, up 1 percentage point from December and 3 percentage points from January 2019. Twenty-one percent thought it was a bad time to sell, down 1 percentage point from the previous month and 7 percentage points from the previous year.

Among those who said it was a good time to sell a home, 26 percent said high home prices was the main reason they held this view while 24 percent named favorable economic conditions. Nineteen percent said favorable mortgage rates made it a good time to sell, while 15 percent cited a limited housing inventory.

Forty-eight percent said they think home prices will go up in the next 12 months, down 2 percentage points from the previous month but up 3 percentage points from the previous year. Just 7 percent said they think prices will drop, down from 10 percent in the previous two months and 15 percent in January 2019. The average expectation for home price change over the next 12 months was a 2.5 percent increase, down from an expectation of 2.9 percent in the previous month but up from an expectation of 1.6 percent in the previous year.

For the third month in a row, 86 percent said they were not concerned about losing their job in the next 12 months; this was also unchanged from January 2019. Fourteen percent said they were worried that they might face unemployment in this period, up 2 percentage points from the previous month and 1 percentage point from the previous year.

Twenty-seven percent said their household income is significantly higher than it was 12 months ago, down from 28 percent in the previous two months and 34 percent in January 2019. Eleven percent said their income is significantly lower, unchanged from the previous month and 4 percentage points higher than in January 2019.

Fifty-four percent said they expect their personal financial situation to improve in the next 12 months, up 4 percentage points from the previous month and 3 percentage points from the previous year. For the fifth consecutive month, 9 percent said they expect their financial situation to worsen – a year-over-year drop of 2 percentage points.

Fifty-eight percent said they think the U.S. economy is on the right track, up 5 percentage points from the previous month and 9 percentage points from the previous year. Thirty-four percent said they think the economy is on the wrong track, down 2 percentage points from the previous month and 9 percentage points from the previous year.

Fannie Mae's National Housing Survey is issued each month and interviews approximately 1,000 American adults by telephone. Respondents are asked approximately 100 questions to gauge attitudinal shifts toward the housing market and economy.

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