Consumer Confidence Stabalizing

Fannie Mae Housing Survey Shows Consumer Confidence is Stabilizing

Fannie Mae conducts a monthly “National Housing Survey” and the latest was conducted in February 2012 via telephone to 1,003 Americans. The purpose was to determine attitudes to owning and renting a home, mortgage rates, homeownership distress, the economy, household finances, and overall consumer confidence.

Consumers’ attitudes have stabilized in personal finances, housing, and employment compared to late summer and fall of 2011. Confidence in the economy changed the most with 35 percent responding that the economy is on the right track, compared to 16 percent in November 2011 or an 119 percent increase! Another 57 percent thought the economy was on the wrong track, compared to 5 percent in November 2011 or a 24 percent decrease.

Confidence about personal financial situations, household income, and household expenses, as well as attitudes about homeownership and renting remained at steady levels. Concern about job loss in the next 12 months stabilized since late fall of 2011. Approximately 76 percent were unconcerned in February 2012, compared to 70 percent in November 2011 or an 8.6 percent increase.

Economy and Household Finances

Confidence in the economy continued to rise in February 2012 compared to January 2012. Approximately 35 percent thought the economy was on the right track in February, compared to 30 percent in January – a 17 percent increase. While 57 percent said it was on the wrong track in February compared to 63 percent in January – an 11 percent decrease.

Only 12 percent thought their financial situation would get worse in the next 12 months compared to 15 percent in January – a 20 percent decrease. This was the lowest it has been in over a year.

Sixteen percent said their income is significantly lower than 12 months ago, compared to 17 percent in January – a six percent decrease.  On the other hand, 63 percent said it stayed the same compared to 62 percent in January – a two percent increase.

Thirty-three percent said their expenses have increased significantly over the past 12 months, compared to 36 percent January 2012 – an eight percent decrease. This is the lowest level in the past 12 months.

Homeownership and Renting

On average, responders expected home prices to increase by 0.8 percent over the next 12 months, which was down slightly since January 2012.

Regarding home prices, 53 percent of the responders said the prices would stay the same.  Those that expected the prices to increase over the next 12 months did not change from January, which was 28 percent.  Another 15 percent expected them to decline, compared to 16 percent in January – a six percent decrease.

Ten percent thought mortgage rates would go down in the next 12 months, compared to eight percent in January – a 25 percentage increase.

Thirteen percent thought it was a good time to sell, compared to ten percent in January – a 30 percent increase.  This was the highest level in over a year.  Seventy percent thought it was a good time to buy, compared to 71 percent in January – a 1.4 percent decrease.

On average, responders expected home rental prices to increase by 3.5 percent over the next 12 months, which is a slight increase since January.

Forty-five percent thought home rental prices will go up, compared to 43 percent in January – a 4.7 percent increase. Three percent expected them to go down, compared to 5 percent in January – a 40 percent decrease. This was the lowest value in over a year.

Sixty-five percent said they would buy their next home if they were going to move, compared to 64 percent in January – a 1.6 percent increase.  Another 29 percent would rent, compared to 30 percent in January – a three percent decrease.

“The pickup in the pace of hiring over the past few months has helped soothe consumer concerns, lifting their moods regarding their personal finances, the direction of the economy, and their views on the housing market,” said Doug Duncan, vice president and chief economist of Fannie Mae. “As a result, we’ve seen more potential for economic upside, creating a more balanced near-term outlook.”

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

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This post was written by John Ulzheimer