June Sees Housing Confidence Boost in Spite of Economic Worries

Downturns in economic confidence hasn't shaken consumers' optimism in the housing market, ""Fannie Mae's"":http://www.fanniemae.com/portal/index.html National Housing Survey for June showed.

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According to the survey, the average home price expectation rose to 2 percent in June, up 0.6 percent from May and the highest recorded value since the survey began two years ago. In addition, 35 percent of respondents expect that home prices will go up in the next year, the highest level recorded since the survey's inception.

Thirty-seven percent of respondents said they think mortgage rates will go up in the next 12 months, a drop of 4 percentage points from May. According to Freddie Mac's Primary Mortgage Market Survey, rates steadily fell through much of the year's second quarter, reaching new lows week after week.

The combination of low rates and low home prices spurred a small boost of confidence in the housing market. The percentage of respondents who said it is a good time to buy a home increased slightly to 73 percent, while the percentage who said it is a good time to sell remained flat at 15 percent. Sixty-nine percent said they would buy if there were going to move, an increase of 6 percentage points from May's survey and the highest level since the survey began.

This optimism grew in spite of faltering confidence in the economy. An upward trend of confidence in the economy saw a stall in June, with 36 percent of respondents saying they believe the economy is on a right track-a slight drop from April and May.

Forty-two percent of respondents said they expect their financial situation to stay the same over the next 12 months, a decrease of 4 percentage points. The number of those who expect their situation to get better steadied at 43 percent. Thirteen percent said they expect their situation to get worse, a slight increase from the last survey.

Finally, the survey found that household expenses remained stable, with 55 percent reporting that expenses stay about the same as they were a year ago. The number of respondents reporting a household income higher than it was a year ago fell 4 percentage points to 18 percent, while the percentage reporting a lower income stayed flat at 15 percent.

""While consumers remain cautious about the general economy, their attitudes toward the housing market continue to improve,"" said Doug Duncan, SVP and chief economist of Fannie Mae. ""Although this positive trend may be short-lived if the general economy falters, one might ask whether consumers are increasingly seeing the current environment as a unique opportunity to buy a home while home prices remain depressed, rental costs are increasing, and interest rates are near historic lows.""