Concern about the direction of the national economy grew in October and more Americans expect both rents and home prices to rise over the next 12 months. Two-thirds would buy a home if there were moving and nearly three-quarters of the nation still says it is a good time to buy. Fannie Mae's October 2012 National Housing Survey shows confidence in the economy is still growing with further indications of a slow but steady housing recovery, but consumers are more concerned about the direction of the economy than they were in July and fewer than one if five say it is a good time to sell despite tight inventors across the nation and expectations of rising prices. When asked about the state of the economy, the share of respondents who say it's on the right track dropped to 38 percent, down 3 percentage points from last month. Conversely, those who say the economy is on the wrong track climbed 3 percentage points to 56 percent. The share of consumers who expect their personal financial situation to get better or stay the same over the next year remained essentially level at 43 percent and 40 percent, respectively. Continuing the positive upward trend seen over the past year, survey respondents expect home prices to increase an average of 1.7 percent in the next 12 months. The share who says home prices will decrease in the next year dropped to 10 percent – 13 percentage points lower than October 2011 and the lowest level since the survey's inception in June 2010. Additionally, the positive difference between those saying home prices will go up and those saying they will go down remained steady at a survey high of 26 percentage points. The percentage who believes mortgage rates will go up climbed 4 percentage points to 37 percent following a steep drop in September. Half of respondents, 50 percent, believes home rental prices will rise in the next year – a 3 percentage point increase over last month and the highest level since the survey began. Seventy-two percent of respondents say it is a good time to buy, while 18 percent say it is a good time to sell, consistent with the trends seen over the past six months. "This has been a year of steady growth in the percentage of consumers with positive home price expectations," said Doug Duncan, senior vice president and chief economist of Fannie Mae. "Increasing household formation, encouraged by an improving labor market, is adding additional momentum to the housing recovery and putting upward pressure on rental price expectations. Expected increases in both owning and renting costs may encourage more consumers to buy and add further strength to the housing recovery already under way." Highlights:
- Consumers' average home price change expectation edged up slightly to 1.7 percent, continuing the positive trend of the past year.
- Ten percent of those surveyed say that home prices will go down in the next 12 months, a 13 percentage point decrease since October 2011, and the lowest level since the survey's inception in June 2010.
- After a sharp drop last month, the percentage who thinks mortgage rates will go up rose 4 percentage points in October to 37 percent.
- The average rental price expectation jumped up by 0.8 percent to 3.9 percent, a return to the level seen in July 2012.
- Fifty percent of those surveyed say home rental prices will go up in the next 12 months, a 3 percentage point rise over last month and the highest level since the survey's inception in June 2010.
- The percentage that expects their personal financial situation to get better over the next 12 months remained level at 43 percent.
- Nineteen percent of respondents say their household income is significantly higher than it was 12 months ago, a slight increase from last month's total of 17 percent.
- Household expenses remained stable over the past month, with 56 percent responding that their household expenses stayed the same compared to 12 months ago.