Tuesday, November 12, 2013 / by Carlos J Higareda
Gov't Shutdown Having Lingering Effects on Confidence
The government shutdown deflated Americans’ outlook toward the economy and the housing market, according to the October National Housing Survey conducted by Fannie Mae of 1,000 home owners and renters. In the latest survey, the gap widens between those who think the economy is on the right track and those who think it’s headed in the wrong direction.
"Housing market sentiment has clearly suffered in the wake of the recent government shutdown and debt ceiling debate,” says Doug Duncan, 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,” Duncan notes. “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 percentage of Americans who said they expect their financial situation to worsen in the next year reached a survey high -- 22 percent.
Fewer home owners also said now is a good time to buy a house, falling to 65 percent and reaching another survey low. The percentage had been 72 percent who said it’s a good time to buy.
Fewer Americans also thought it was a good time to sell, with the percentage dropping from 38 to 37 percent in the latest survey.
Home owners aren’t expecting much appreciation in their homes in the next year. Expectations over home appreciation in the next 12 months fell by 4 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.
Fewer Americans are expecting mortgage rates to increase over the year, falling from 63 percent to 57 percent.
Source: Fannie Mae October 2013 National Housing Survey