Consumer sentiment toward housing appeared to turn a bit negative in August.  Fewer participants in Fannie Mae's National Housing Survey thought it was now a good time to either buy or sell a house; expectations about continued home price gains ratcheted down, and views about the overall economy were less positive than in July.

Fannie Mae said respondents' view of their own income both retrospectively and prospectively turned more bearish despite ongoing improvements in the labor market. But while attitudes softened, they suggest that housing activity may result in a modest recovery in 2015 after some pullback this year.   Those who feel the overall economy is on the right track was unchanged at 35 percent but those giving "wrong track" answers fell 3 percentage points to 56 percent.

 

 

The share of consumers who said this is a good time to buy a home dipped for the second consecutive month.  Sixty-four percent of respondents view conditions as good for a home purchase, down 3 percentage points from July and 6 points from June.  The responses matched the all-time survey low.  Those who view it as a good time to sell dropped 5 percentage points.

 

 

The "good time to buy" number might actually reflect a little optimism as buyers look forward.  The number of respondents who expect interest rates to fall increased by 4 percentage points to 50 percent and that view of increased affordability is not matched by expectations for home price increases. 

Forty-two percent of respondents said they expected further home price gains, unchanged from July but down from 48 percent in March.  Those who think prices will drop went from 8 to 9 percent.  Among those expecting price increases the amount of that increase continues to shrink and was at 2.1 percent in August compared to 3.4 percent a year earlier.

 

 

Expectations about rents however reversed July's one month decline.  Rents are expected to increase by 53 percent of respondents, up from 51 percent the previous month, and the average amount of the increase expected went to 4.1 percent from 3.8 percent.

The share of respondents who think it would be easy to get a home mortgage today increased by one percentage point.  The share who say they would buy if they were going to move fell to 64 percent, while the share who would rent increased to 32 percent-the narrowest gap in over a year.

"The August National Housing Survey results lend support to our forecast that 2015 will likely not be a breakout year for housing," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The deterioration in consumer attitudes about the current home buying environment reflects a shift away from record home purchase affordability without enough momentum in consumer personal financial sentiment to compensate for it. To date, this year's labor market strength has not translated into sufficient income gains to inspire confidence among consumers to purchase a home, even in the current favorable interest rate environment. Our third quarter Mortgage Lender Sentiment Survey results, to be released later this month, are expected to show whether mortgage demand from the lender perspective is in line with consumer housing sentiment."

The National Housing Survey has been conducted on behalf of Fannie Mae every month since June 2010.  Over 1,000 Americans, homeowners both with and without mortgages and renters are polled by phone to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence.