Rising mortgage rates combined with increasing home prices could force many buyers to act sooner rather than later, resulting in a flurry of sales activity over the next several months, Fannie Mae's June 2013 National Housing Survey reveals.
For June, the share of respondents who said mortgage rates would go up during the next 12 months jumped 11 percentage points to 57%, the highest level in the survey's three-year history, according to the government-sponsored enterprise (GSE).
The share of people who said home prices will go up over the next year remained unchanged from May at 57%. About another 7% said home prices would go down over the next year.
Although confidence in both the buying and selling environments receded slightly, it remained near the survey high of May, with 72% saying it is a good time to buy and 36% saying it is a good time to sell.
‘The spike in mortgage rate expectations this month seems to have had an impact on a number of the survey's indicators and may increase housing activity in the near term by driving urgency to buy,’ said Doug Duncan, senior vice president and chief economist at Fannie Mae. ‘Consumers may recognize that today's still favorable mortgage rates and homeownership affordability levels will recede over time. Given rising home and rental price expectations and improving personal financial attitudes, more prospective home buyers may be deciding that now is the time to get off the fence.’
Americans' outlook on their personal finances also increased significantly in June. The share that expects their personal financial situation to improve during the next year climbed to 46%, the highest level since June 2010, according to the GSE.
What's more, the share that said their household income is significantly higher than it was 12 months ago jumped six percentage points to a survey high of 26%.
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