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Survey: Consumer Confidence Up Significantly in September

Consumer optimism about the housing market and homeownership improved substantially in September, ""Fannie Mae"":http://www.fanniemae.com/portal/index.html reported.


According to the GSE's ""September 2012 National Housing Survey"":http://www.fanniemae.com/resources/file/research/housingsurvey/pdf/nhs-monthly-data-100912.pdf, upward trends in home prices and downward trends in mortgage rates throughout the summer reinforced positive attitudes about where the market is headed.

On average, consumers expected a 1.5 percent home price change, consistent with recent increases. That figure is slightly down from August's 1.6 percent, but a significant year-over-year increase from -1.1 percent in 2011. September marks nearly a full year in which price change expectations have been positive.

Also encouraging was that 37 percent of respondents said they expect home prices will increase in the next year, up from 35 percent in August to the highest level on record since the survey began in 2010. The number of those who expected prices to stay flat fell two percentage points to 46 percent, while the number of those expecting price decreases remained unchanged at 11 percent for the third consecutive month.

""Consumers are showing increasing faith in the nascent housing recovery,"" said Doug Duncan, senior VP and chief economist at Fannie Mae. ""Home price change expectations have remained positive for 11 straight months, and the share expecting home price declines has stabilized at a survey low of only 11 percent.""

With mortgage rates once again posting weekly record lows, the number of respondents expecting rates to increase in the next year dropped a full seven percentage points to 33 percent. Half of those surveyed said rates will likely stay the same.


With the Federal Reserve committed purchasing mortgage-backed securities and keeping interest rates low, analysts have predicted historically low-but stable-rates for the near future.

In another record high for Fannie Mae's survey, 19 percent of respondents said now is a good time to sell, while those who say it is a good time to buy dipped one percentage point to 72 percent. The percentage of consumers who would buy if they were going to move increased to 69 percent, tying the survey's highest level.

Confidence about the economy also grew in September, marking a turnaround from a year of pessimism. Regarding the overall economy, 41 percent of consumers believe the country is on the right track, up substantially from 33 percent in August's survey. While more than half-53 percent-of respondents still believe the economy is headed in the wrong direction, that number is significantly less than August's 60 percent. The ""right track"" and ""wrong track"" figures are at their highest and lowest readings, respectively, in the history of the survey.

While consumers expressed more confidence in the economy, their current economic situation appears to be a little shakier. The share of respondents who say their household income is ""significantly higher"" than it was 12 months ago fell from 20 percent in August to 17 percent in September, while the share who said their income is ""significantly down"" rose one percentage point to 17 percent.

Meanwhile, 34 percent said their household expenses are significantly higher than they were a year ago, an increase from August.

Nevertheless, consumers appear to have a rosier outlook for the future. Forty-four percent of respondents expect their personal financial situation to improve in the coming year, up from 42 percent in August. The number of respondents who expect their situation to get worse fell one percentage point to 12 percent.

With the ""recently released jobs report"":https://themreport.com/articles/unemployment-slips-below-8-for-first-time-since-2009-2012-10-05 showing a marked decrease in unemployment, Duncan remarked that he expects increased confidence in the next report.

""Friday's September jobs report, including the strong upward revisions for prior months, a sizable increase in earnings, and a sharp decline in the unemployment rate, should provide further impetus for improving consumer confidence in the housing market,"" he said.


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