Consumer confidence in homebuying hits all-time low | South Salem Real Estate

Consumer confidence in housing significantly widened last month, as most taxpayers were turned off by the federal government shutdown and the ongoing debt ceiling debate, taking a toll on American’s outlook toward the housing market.

The share of consumers who believe it’s a good time buy a house declined to 65% — an all-time low — while the number of those who believe mortgage rates will go up in the next year fell to 57%, according to Fannie Mae’s latest monthly survey.

It’s important to note that the survey was conducted primarily in the first two weeks of October – before the government shutdown ended and the debt ceiling agreement was reached.

Generally speaking, buying a home is a bet on the future and the federal freeze created a lot of uncertainty about the near-term economic state, explained Trulia (TRLA) chief economist Jed Kolko.

“Also, affordability has worsened: both rising mortgage rates and rising home prices have pushed more homes out of reach of the middle class, which would also lead to a decline in people thinking it’s a good time to buy,” he added.

The gap between the share of consumers who say the economy is on the wrong track and those who believe all engines are a-go widened from 16 percentage points in September to 40 percentages points in October — a record month-over-month change.

Nonetheless, the steep decline in Americans’ housing sentiment, which is expected to continue to tumble down as housing debates continue to heat up, Fannie Mae senior vice president and chief economist Doug Duncan doesn’t believe it will derail the gradual healing in housing.

“While this decline in consumer optimism may portend a slowing of the housing recovery, supply constraint data suggest that we are likely to see continued positive growth in home prices,” Duncan said.

He added, “That being said, October’s survey results suggest that consumer attitudes are highly responsive to ongoing debate and decision-making in Washington. Three key budget and debt ceiling dates loom in December, January, and February. The handling of each will likely play a key role in determining the pace and timing of any recovery in consumer sentiment.”

The average 12-month price change expectation continued to fall, dropping 0.2% to 2.9%.

Additionally the share of people who believe home prices will go up in the next 12 months fell to 36%, while those who say prices will go down, increase to 10%.

The share of respondents who say they would buy if they were going to move increased to 70%, a new high.

Interestingly, the share of consumers who said their personal financial situation would get worse in the next 12 months hit a new high of 22%.

Consequently, the amount of respondents who say the economy is on the right track fell 12 percentage points, which is the biggest monthly record change in the survey’s history.

 

 

http://www.housingwire.com/articles/27847-consumer-confidence-in-homebuying-hits-an-all-time-low