Amidst the positive May job report from the Bureau of Labor and Statistics (BLS), consumer attitudes concerning the housing market showed vast improvement for the month of May, according to results from Fannie Mae's May 2015 National Housing Survey. These positive changes also support the case for an increase in housing activity this year.
The BLS’s May jobs report showed an acceleration in average hourly earnings and reflected recent trends of firming personal income growth, revealing that the share of survey respondents reporting a significant increase in their household income climbed 4 percentage points to a near all-time high, Fannie Mae reported.
“Things are looking up for housing,” said Doug Duncan, SVP and chief economist at Fannie Mae. “Those saying it is a good time to sell a house hit a survey high of 49 percent. Also, the percentage of consumers telling us their household income is significantly higher than 12 months ago grew six percentage points to 28 percent over the past two months.”
While job growth continues to push meaningful income growth, the outlook for housing market growth is also improving, the GSE says. Of those surveyed, the share of respondents who say home prices will go up in the next 12 months increased to 49 percent, while the share who say home prices will go down dropped to 6 percent. Those who say it is a good time to buy a house rose back up to 66 percent, while those who say it is a good time to sell went up to a new survey high of 49 percent.
Additionally, the survey found that 66 percent of respondents noted that they would prefer to buy rather than rent a home on their next move, while the share who would rent fell to 27 percent. The percentage of respondents who expect home rental prices to go up rose to 55 percent. Those who think it would be easy to get a home mortgage decreased to 50 percent, while those who think it would be difficult remained at 46 percent.
The survey found that 47 percent of consumers say that mortgage rates will go up in the next 12 months. The average 12-month home price change expectation remained at 2.8 percent, while the average 12-month rental price change expectation rose to 4.3 percent. The share of respondents who say the economy is on the right track decreased by 4 percentage points to 38 percent, while those who say the economy is on the wrong track rose by 3 percentage points to 52 percent, the survey says.
“We have found that these two indicators–good time to sell and income growth–are key drivers for the performance of the housing market and play an important role in our soon to be released Home Purchase Sentiment Index (HPSI),” Duncan said. “The increase in these indicators suggests our forecast of moderate improvement in the housing market in 2015 is on course and mirrors the near-term performance of other leading market data, including mortgage applications and pending home sales.”
Click here to view Fannie Mae's complete May 2015 National Housing Survey.