Consumers were more optimistic toward the economy than they've been at any point in the last five years, according to Fannie Mae's February 2015 National Housing Survey released Monday.
The percentage of respondents who said they believe the economy is on the right track increased by 3 percentage points since January's survey up to 47 percent, an all-time high since the survey began nearly five years ago. The rise in consumer optimism is largely attributed to recent employment gains, which totaled nearly 300,000 for February and averaged 266,000 per month in the last 12 months, according to the most recent report from the Bureau of Labor Statistics. In that same BLS report, the nation's unemployment rate dropped to 5.5 percent, its lowest level in nearly seven years.
Also hitting an all-time high for Fannie Mae's housing survey was the percentage of respondents who said they believe it is easier to get a mortgage today (54 percent). The share of respondents who said they believe it would be difficult to get a mortgage dropped by 4 percentage points to an all-time survey low of 43 percent.
"Continuing improvements in consumer attitudes in this month’s National Housing Survey lend support to our expectation that 2015 will be a year of the economy dragging housing upward," said Doug Duncan, SVP and chief economist at Fannie Mae. "The share of consumers who think the economy is on the right track rose to a record high since the inception of the survey nearly five years ago and for the first time exceeded the share who believe it’s on the wrong track. Consumer confidence seems to be getting a boost from employment growth. This is reflected in their views on the ease of getting a mortgage today, which also reached a survey high in February."
One area where Duncan said needs improvement in order for the prediction of the economy "dragging housing upward" to come true is in the area of wage gains. According to the BLS employment report released last week, the average hourly wage increased from January to February by only 3 cents up to $24.78 – after rising by 12 cents from December to January.
While the percentage of respondents in Fannie Mae's survey who said they believe home prices will go up in the next 12 months declined to 46 percent, the share who said home prices will go down also declined, to 6 percent. The percentage who said mortgage rates will go up in the next 12 months increased to 48 percent.
Those numbers combined with the attitudes of survey respondents regarding their finances and income does not bode well for housing. About 46 percent of respondents said they expect their personal finances to get better in the next 12 months, representing a decline from January. The percentage of respondents who said their household income is significantly higher than it was 12 months ago declined by 5 percentage points, down to 24 percent.
According to Fannie Mae, the percentage of survey respondents who said they expected to buy a home the next time they move declined by 1 percentage point but still was reported at 65 percent for February.
"We continue to see strength in attitudes about the current home buying and selling environment and consistently high shares of consumers saying they expect to buy a home on their next move," Duncan said. "At the same time, we still need to see further growth in consumer optimism toward personal finances and income for more robust improvement in housing market attitudes."