Consumers Grow in Optimism Toward Home Prices
Consumers continued to show increased optimism toward home price, rental price, and mortgage rate expectations, a sign that home purchase activity may see a boost in the coming months.
“Combined with consumers’ growing mortgage rate and rental price increase expectations, the positive home price outlook could incentivize those waiting on the sidelines of the housing market to buy a home sooner rather than later and thus support continued housing acceleration,” said Doug Duncan, SVP and chief economist at Fannie Mae.
The average 12-month home price change expectation jumped from 1.7 percent in November to 2.6 percent in December, the highest level since the survey’s inception in 2010. To compare, the average price change expectation a year earlier was only 0.8 percent.
The share of respondents who believe home prices will rise over the next year also reached its highest recorded level, increasing 6 percentage points to 43 percent. The share of those expecting price declines fell to 11 percent, while the share who believe prices will stay more or less the same fell to 40 percent.
Twenty-one percent of respondents said now is a good time to sell, a decrease of 2 percentage points from November’s record high but still 10 percentage points above the December 2011 survey. The number of respondents who said now is a good time to buy decreased slightly to 71 percent, staying within the small range seen throughout 2012.