According to a recent survey conducted by Fannie Mae, the wake of the government shutdown and the ongoing debt ceiling debate continues to distort the perception of the economy and housing industry. The October 2013 National Housing Survey acknowledged an increasing gap between those who believe we are on the right track and those who do not. Accordingly, the separation widened from 16 percentage points in September to 40 percentage points in October. More and more Americans are beginning to worry that these recent events are going to have a lasting impact on the housing sector as a whole.
In response to the increasingly negative outlook, buyers are less inclined to pursue the acquisition of a house in today’s market. Consumers who believe it is a good time to purchase a home declined to 65 percent. This drop represents an all-time survey low. Surprisingly, the amount of people who believe mortgage rates will continue to increase into next year fell six percentage points to 57 percent.
Despite the troubling outlook, in the face of a looming debt ceiling, analysts familiar with the market believe there is hope for encouragement. Decreasing sentiment is unlikely to derail any progress we have made in our current recovery. The housing market is projected to continue on a path of gradual restoration. However, it may take longer than originally anticipated.
“Housing market sentiment has clearly suffered in the wake of the recent government shutdown and debt ceiling debate,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “In October, we saw attitudes toward both the economy and the current buying environment experience their largest one-month drops in the survey’s three-year history. 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. 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.”
Homeowners aren’t expecting much appreciation in their homes in the next few years. Expectations over home appreciation in the next 12 months fell by four percentage points to 46 percent. Meanwhile, 52 percent of Americans surveyed said they expect rents to rise, on average, by 4.4 percent in the next year.
The October 2013 National Housing Survey offers insight on consumer outlook. Therefore, it serves as a good indicator for respective attitudes towards owning and renting a home. It may even help to determine the future course of investment activity across housing types.