Fannie Mae recently released its Monthly National Housing Survey, which polls consumers across the U.S. about their attitudes on homeownership, renting a home, the economy, and household finances -- and their opinions may surprise you.
1. Renting or buying
The results showed 69% of respondents said they would buy a home if they were to move, which actually eclipses the 65% home ownership rate reported by the Census Bureau. The really surprising thing about this is that last month, that rate was at 65%, and the 69% rate is the highest in the history of the survey.
While many banks are expecting their mortgage originations to fall as a result of less refinancing volume, with more Americans comfortable buying a home, the largest mortgage originators such as Wells Fargo (NYSE:WFC), JPMorgan Chase (NYSE:JPM), and Bank of America (NYSE:BAC) could all benefit if Americans are becoming more comfortable owning versus renting.
2. Mortgage rates will... in the next 12 months
In April, only 43% of Americans thought mortgage rates would rise in the next 12 months, and since then, rates have risen from 3.5% to 4.5%. While the correction has occurred as that number now stands at 63%, the real surprise here is that 34% think rates will either stay the same or go down in 12 months. The Mortgage Bankers Association recently predicted mortgage rates would stand at 5% in the third quarter of 2014.
Rates have certainly risen tremendously over the last few months -- but while the pace at which they rise may change, it's likely those rates will keep climbing. So it's just a little surprising to learn that 34% of the public doesn't think those rates will rise.
3. Home price changes
Those polled by Fannie Mae noted they expected home prices to rise by 3.1% over the next 12 months, which is down from the 3.4% expectation they had last month. The surprising thing here is not the falling expectation of home prices, but how in-line that projection is when compared to historical averages.
In fact, the S&P/Case-Shiller U.S. National Home Price Index has been tracking home prices since 1987, and the average home value has risen at an annual rate of 3.3% -- which shows that consumers have an appropriate expectation of where home prices are likely to be over the next year.
4. It's a good time to...
Despite rising home prices and rising mortgage rates, the number of people who felt like it was a good time to buy was up slightly to 72%, and those who felt like it was a good time to sell stood at 38%, which is double what it was last September, as shown in the chart below:
These are two very helpful data points because they can shine a light on the general activity of the housing market. With those saying it's a good time to buy staying relatively stable over the last year, and the number of people saying it is a good time to sell increasing, there will likely be more activity in the housing market, which again is probably a good thing for the three banks mentioned above.
5. The economy is on the wrong track
The final surprise was the percent of Americans who felt the economy was on the wrong track, which stood at 55%, versus 39% who felt like it was on the right track. Those thinking America was headed in the right direction peaked last November at 45% -- but fell to 38% in December following the Fiscal Cliff and debt ceiling debates and has largely remained at that level for almost all of 2013:
With the government shutdown continuing in Washington this week, it will likely come without surprise if that number falls even lower next month. The final surprise here is that Americans have felt roughly the same about the direction of its economy for the last 18 months.
While the S&P 500 has rebounded by 25% since April 2012, the public still feels like we are largely on the same path as we were 18 months ago. Although the housing picture also looks much brighter than it did at that point, the majority of Americans still feel like the economy is headed in the wrong direction.
Fool contributor Patrick Morris owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.