Housing Recovery Keeps Pressing On, Despite Some Setbacks

Although there still remains room for improvement, the trends for housing and the economy – and Americans' outlook – have remained positive overall, according to the results of both Fannie Mae's National Housing Survey and the Obama Administration's Housing Scorecard for February.

Notably, Fannie Mae reports that respondents' home price expectations climbed significantly in February – with 50% saying home prices will go up in the next year – following a measurable downturn in January, while the share of those who believe it is a good time to buy a home ticked up by three percentage points.

At the same time, Fannie says those who believe that it would be easy to get a mortgage dropped seven percentage points from January's all-time survey high of 52%. The share of respondents who say the economy is on the wrong track increased three percentage points to 57% in February, following a four-month decline. Despite a decrease in optimism across some of the indicators the month before, consumer attitudes remain in generally positive ranges, Fannie notes.

‘Similar to the noisy economic and housing data published over the past few months, we've seen a corresponding increase in volatility in our survey results, particularly for home price expectations and perceptions about the ease of getting a mortgage,’ comments Doug Duncan, senior vice president and chief economist at Fannie Mae.

Duncan believes that the recent unusual weather patterns might have played a role in the 6% jump in the number of consumers who said their household expenses have increased significantly from a year ago (e.g., heating costs). "Despite the volatile month-to-month changes, we believe that the housing recovery is continuing but is not yet robust," he says.

Additionally, Fannie Mae's share of respondents who say the economy is on the right track decreased four percentage points from the month before to 35%.

To offer another view into the housing market for February, the Obama Administration's Housing Scorecard shows progress among key indicators, including rising purchases of new homes, decreasing foreclosures and stabilizing house prices.

Kurt Usowski, deputy assistant secretary for economic affairs for the U.S. Department of Housing and Urban Development, says while there is "encouraging news" for housing, it "does not detract from the need to build on this progress, as too many homeowners remain underwater and mortgage delinquency rates remain elevated."

Part of the "encouraging news" is that homeowners' equity continues to rise. According to the Federal Reserve, homeowners' equity was up nearly $412 billion, or 4.3%, in the fourth quarter of 2013, reaching $10.026 trillion – the highest level since the fourth quarter of 2007. Homeowners' equity has risen sharply since the beginning of 2012, with equity up 60%, or more than $3.7 trillion, during this period.

New home purchases have also increased. After declining for the last two months, purchases of new homes rose 9.6% to a seasonally adjusted annual rate of 468,000 in January – the highest unit-pace since mid-2008.

Tim Bowler, Treasury's acting assistant secretary, remarks, "While the housing market as a whole has made significant progress, servicers still have room for improvement, and Treasury will continue to press the industry to improve servicer performance."

While there are positive trends in the housing market, the scorecard notes that officials caution the economy is still healing from the Great Recession.

Fannie Mae's entire survey can be found here.
The Obama Administration's entire scorecard can be found here.


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