Home Prices Expected to Rise Into Summer: Fannie Mae
NEW YORK (BankingMyWay) -- Call it a small oasis in a parched economy.
Fannie Mae's most recent National Housing Survey has some positive news for U.S. homeowners, at least on one front.
The May 2012 survey says that home prices, on average, are expected to rise by 1.4% going into the summer selling season.
That’s a boon to homeowners with a “for sale” sign on their front lawn. Summer can be a busy time for homebuyers who want to lock down a deal before the kids go off to school in September.
Fannie Mae stops short of saying the real estate housing market is going like gangbusters: Even though home prices are up, buyers are taking a practical, cautious approach to buying a new home in a toxic economy.
“Our May consumer data show that Americans are taking a ‘wait and see’ approach about buying or selling a home,” notes Doug Duncan, chief economist of Fannie Mae in the report. “This is not surprising given their assessment that their income during the past twelve months and their personal financial expectation for the next twelve have leveled off. These data are in line with what we are seeing on the macroeconomic front, as upside and downside risks and activities are moderating one another.”
Duncan says a “meaningful recovery” won’t gain any traction until the U.S. unemployment level declines. This week the U.S. Labor Department announced that unemployment claims fell from 389,00 (revised from last week) to 377,000 this week. The official U.S. unemployment rate is at 8.2%, with many economists noting the actual jobless number is higher than that figure.
The hemming and hawing over the delicate economy extended beyond the weekly unemployment claims number, with billionaire investor Warren Buffet telling a Washington, D.C. gathering of economists on Thursday that the odds were “very low” that the U.S. would fall back into recession.
The Fannie Mae report underscores the fragility of the U.S. economy, with consumers weighing both good and bad news (especially about jobs), and taking their time about buying a new home.
“Current jobs data are reminiscent of the spring slowdown that continued into the summer months during the last two years,” adds Duncan. “If this pattern continues, we do not expect to see any significant upturn in consumer sentiment during the summer and a meaningful housing recovery likely will be delayed once again.”
Here are the key points from the May housing report from Fannie Mae:
• Consumers surveyed by Fannie Mae say that home prices should rise by 1.4% over the next 12 months, up from 0.9% in March, 2012. Fannie Mae calls that the “highest value” it has recorded on its survey.
• 34% of Americans expect the value of their homes to rise in the next year, the highest level since March 2011.
• 41% of consumers surveyed say mortgage rates will rise over the next 12 months.
• 72% of Americans say it’s a “good time” to buy a house.
• 32% of consumer said they would rent a home, while 63% said they would buy a home.
Fragile is indeed the watchword for U.S. consumers in 2012. But at least the needle is moving in the right direction, as consumers seem slightly more optimistic about the U.S. housing market.
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