Consumer attitudes toward the current condition of the home selling market and future home rental prices may launch purchase activity forward for the rest of 2015, according to Fannie Mae’s June 2015 National Housing Survey. Optimism among consumers about the housing market has reached new survey highs and strong job and income growth are making consumers appear more favorable in the selling market, indicating a possible increase in the existing home supply.
According to the survey, an increase in housing supply from sellers along with higher rental cost expectations may be motivating more potential homebuyers to purchase. Among those questioned, 52 percent believe that now is a good time to sell a home, an increase of three percentage points, a new survey high and the first time in history this number has surpassed the 50-percent threshold. Simultaneously, 59 percent of those surveyed said they expect rental prices to go up in the next 12 months, an increase of 4 percent and also a new survey high. Tying a survey low, 63 percent of respondents say that now is a good time to buy a home.
“Our June survey results show the positive impact on housing of job and income growth,” said Doug Duncan, SVP and chief economist at Fannie Mae. “The expectation of higher rents is a natural outgrowth of increasing household formation by newly employed individuals putting upward pressure on rental rates. A complementary rise in the good time to sell measure suggests that limited inventory, which is putting upward pressure on house prices, gives an increasing advantage to sellers. Together, these results point to a healthier home purchase market, with more renters likely to find owning to be more cost-effective than renting and more sellers likely to put their homes on the market.”
Fannie Mae also reported that home price expectations among consumers is low for June, and less than half of respondents believe that home prices will increase moving forward. The average 12-month home price change expectation fell to 2.6 percent, the survey determined. The share of respondents who say home prices will increased in the next year dropped to 47 percent, while only 7 percent said that home prices will go down. Half of those surveyed believe that mortgage rates will increase in the next 12 months.
Buyers are nearly evenly split when it comes to the obtaining a home mortgage and the number of potential buyers is decreasing, while the number of potential renters is increasing, the survey says. Half of the survey responders think that getting a home mortgage will be easy, while an unchanged 46 percent are sure it will be difficult. The share who say they would buy if they were going to move fell 2 percentage points to 64 percent, while the share who would rent increased to 30 percent.
Economic conditions are also swaying survey responder opinions toward housing conditions, according to Fannie Mae. The share of respondents who say the economy is on the right track increased by 1 percentage point to 39 percent, while those who say the economy is on the wrong track fell by 1 percentage point to 51 percent. The percentage of respondents who expect their personal financial situation to get worse over the next 12 months fell back to 10 percent.