According to Fannie’s June National Housing Survey, consumers’ 12-month home price change expectation stayed in positive territory last month at 2.4%. However, that level was down slightly from previous months. The share of respondents who expected mortgage rates to rise in the next year increased six percentage points to 55%.
“Since we began collecting monthly National Housing Survey data in June 2010, we've seen substantial progress in consumer home price expectations and other key attitudinal measures as the housing recovery gained its footing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Still, we do not expect to see ‘normal’ levels of new residential construction, in the region of 1.6 million new housing units per year, before the end of 2016, our original projection. Such a feat would require a pace of growth in housing starts not seen in decades.
“The uptick this month in the share of consumers expecting mortgage rates to go up and the accompanying decline in home price expectations reflect the pause of activity in the housing market so far this year,” he added. “Despite recent improvement, we now expect an annual decline in existing home sales due to weak volume in the first four months of the year associated with the rise in mortgage rates mid-last year and the current dearth of supply of lower-priced homes. On the bright side, the share of employed consumers who expressed concerns about losing their job dropped to an all-time survey low in June, consistent with last week's upbeat jobs report. This may encourage potential homebuyers to enter the purchase market in 2014, helping to offset some of the weakness in sales activity.”
Consumer confidence in the housing market has risen significantly in recent months, but is still less than it needs to be to return to normal housing levels, according to new data from Fannie Mae.