Rising interest rates, combined with uncertainty over when the Federal Reserve will start tapering its bond buying program, as well as concerns over the upcoming budget and debt ceiling debates in Congress – not to mention the potential for U.S. military strike in Syria – combined in August to negatively impact consumer attitudes toward the housing market, according to Fannie Mae's National Housing Survey.
As such, Americans' outlook on housing growth – which had been trending upward since the beginning of the year – hit a plateau, according to the monthly report, which is based on a survey of 1,001 consumers.
‘The spike in mortgage rates associated with the possibility that the Fed will begin to wind down its asset purchase program later this month has dampened the improving trend in consumer sentiment regarding housing, witnessed in our survey since the start of this year,’ says Doug Duncan, senior vice president and chief economist at Fannie Mae, in a release. ‘The pause in positive momentum is consistent with slowing trends in home purchase contract signings and mortgage applications. Interest rate volatility will likely remain elevated, even after we have more clarity on the pace of the Fed's tapering.’
The survey shows that consumers expect home prices to continue to increase during the next 12 months, but at a slightly reduced pace of about 3.4%. In July, they anticipated prices to increase at a pace of about 3.9% through the remainder of the year.
The share of people who say home prices will go up in the next 12 months rose 2 percentage points to 55%, while those who say home prices will go down increased slightly from July's survey-low to 7%.
The number of Americans who say now is a good time to buy a house decreased 3 percentage points to 71%, while those who say it is a good time to sell a house fell 4 percentage points to 36%.
The share of respondents who say mortgage rates will go up in the next 12 months decreased 2 percentage points to 60%, down slightly from last month's survey high.
About 46% of respondents said they thought it would be easy for them to get a home mortgage today, a slight increase from the previous month.
The share of respondents who said they would buy if they were going to move increased slightly to 65%.
About 37% of respondents said they feel the U.S. economy is on the right track, a decrease of 3 percentage points from July, according to the report.
The share of people who expect their personal financial situation to get better over the next 12 months increased slightly to 44%.
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