Housing Survey Shows Pessimism Deepening

September 9, 2011 (Chris Moore)

If it’s any wonder why Americans continue to sit on the sidelines when mortgage interest rates are at their all-time lows, Fannie Mae’s August National Housing Survey can give you plenty of reasons why.

While those mortgage interest rates are at all-time lows, American’s pessimism towards the economy, home prices, and household finances are at their highest levels since August of last year.

According to Fannie Mae’s report, seventy-eight percent of the Americans surveyed say the economy is on the wrong track. That virtually matches Rasmussen’s latest poll on August 31st, which found that 76 percent of those polled believed the country was going in the wrong direction.

Twenty-seven percent of Americans in Fannie Mae’s survey believed that home prices will go down over the next year. That was a bit more optimistic than what Rasmussen’s August 18th poll which showed 35 percent of those surveyed believed home values would go down over the next year.

And while 69 percent of the respondents overwhelmingly agreed that now was a good time to buy a home, the sellers didn’t quite share their optimism. Only nine percent of the sellers said it was a good time to sell a home.

Household finances weighed heavily on the minds of Americans as 22 percent of those surveyed expect their financial situation to worsen over the next year, the highest level of pessimism seen since August of last year.

Twenty-one percent of the households said their income had increased over the past year while 17 percent said their income had declined significantly. Forty-one percent of the households reported that their expenses had increased significantly compared to 12 months ago.

“The degree to which consumer attitudes appear to be sensitive to global events is interesting, and seems to be reflected in their view of the economy and their growing overall pessimism,” said Doug Duncan, vice president and chief economist of Fannie Mae. “I believe the public was looking at the U.S. debt, deficit, and the ensuing political struggle with one eye, and looking at Europe and their sovereign debt issues with the other eye, and saying: ‘This is not what we want.'”

A little more than half of the Americans surveyed believe the economy is going to be worse in a year from now according to Rasmussen. That’s a pretty grim picture. But the latest Weekly Mortgage Applications Survey by the Mortgage Bankers Association conveys what consumers are thinking. Despite record low, or near record low interest rates for the past five weeks, purchase applications have remained near 15 year lows.

And the lack of purchase applications is a pretty good indication of future buying activity, signaling that potential home buyers are staying away from the market, the consequences of which will surely be reflected in many of the future housing indices.

It also certainly proves that it’s going to take more than just low interest rates to get the housing market moving again.

Tags: Fannie Mae, Rasmussen, pessimism, housing survey, economy, home prices, household finances

Sources:
Fannie Mae
Rasmussen