Consumer caution slows housing momentum

by MPA10 Dec 2013
The housing market’s momentum continues to slow as prospective buyers remain cautious about the economy, according to data released Monday.

In its November National Housing Survey, Fannie Mae reported that consumers are still edgy about the economy. Nearly two thirds of those surveyed though the economy was on the wrong track, and 22% believed that their personal finances would worsen in the next 12 months. Meanwhile, 59% believed mortgage interest rates would go up in the next year.

”We continue to see caution as the defining feature of Americans' attitudes toward the economy and their personal financial situation. In this environment, the housing recovery is likely to improve, but only at a gradual pace,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Our November National Housing Survey results show a loss of momentum in expectations for home prices and personal finances. Also, the majority of consumers expecting higher mortgage rates implies a slowing of housing market momentum. As the economy continues to improve and household balance sheets for most Americans are slow to repair, we continue to see the transition to a full housing recovery as a slow process. Upcoming fiscal policy discussions and labor market developments may also lead to some bumps along the way.”

The share of people who thought home prices would go up in the next 12 months fell slightly to 45% in November, according to Fannie Mae. The percentage of survey respondents who thought it was a good time to buy a house also dropped, falling to a survey low of 64%.

However, the percentage of respondents who said it would be easy for them to get a home mortgage was 50%, up four percentage points from last month.



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