Doug Duncan Archives

Income Growth Key To Housing Sentiment

Fannie Mae’s Home Purchase Sentiment Index looks at consumers’ attitudes toward buying and selling a home, mortgage rates, household income, prices, employment and more in an effort to measure Americans’ feelings about the residential real estate market. According to the most recent release, housing optimism slipped slightly in January, falling 1.7 points from the month before. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says income growth isn’t keeping up with home price increases and it’s causing affordability concerns among potential buyers. “Housing affordability is being constrained because the pace of growth in real income has not kept up with gains in real home prices as demand has grown faster than supply,” Duncan said. “On the bright side, consumers have been increasingly positive about their ability to get a mortgage, suggesting that credit tightness is not the main issue limiting housing market activity today, a feeling that we also see conveyed by lenders in our Mortgage Lender Sentiment Survey.” Duncan expects that consumers’ attitudes toward buying a house will likely remain flat until income growth picks up or there is an increase in the number of lower-priced homes available for sale. More here.

Americans Feeling Confident As Year Ends

According to Fannie Mae’s December 2015 Home Purchase Sentiment Index, Americans were feeling more confident about their jobs, income, and outlook as last year came to a close. In fact, four of the six index components saw improvement from the month before, including the percentage of respondents who said it is a good time to sell a house, those who feel home prices will continue to rise, the number of participants who aren’t concerned about losing their job, and those who said their income has increased significantly over the past year. Doug Duncan, Fannie Mae’s chief economist, said the results could mean more prospective home buyers will be shopping for a house this year. “Consumers ended the year on an improved note with regard to their income, job security, and overall economic outlook,” Duncan said. “Brightening economic prospects, if sustained, should stimulate demand for homeownership. However, continuing upward pressure on rental prices and constrained housing supply, particularly for starter homes, may mean prospective first-time home buyers could face affordability constraints.” Despite increasing affordability concerns, the residential real estate market had a strong 2015 and, with a positive economic outlook and increased demand, this year may see additional improvement. More here.

Mortgage Pros See Easier Credit Ahead

Fannie Mae’s quarterly Mortgage Lender Sentiment Survey polls mortgage professionals to get an idea of how they see the current market and the months ahead. Recently released, their fourth-quarter survey finds lenders reporting that credit standards continue to ease – which is good news for potential home buyers looking to purchase a house in the coming months. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says increased credit availability should help home buyers affected by decreasing affordability conditions. “Several factors point to constrained housing affordability in 2016, particularly for first-time home buyers, including slow single-family supply response and limited inventory of starter homes on the market, strong inflation-adjusted house price appreciation outpacing household income growth, and an upward bias in mortgage rates. However, on net, lenders told us in our fourth-quarter Mortgage Lender Sentiment Survey that they have eased and expect to continue to ease credit standards, which was a consistent trend throughout 2015,” Duncan said. “Thoughtful easing will help mitigate some of the affordability decline moving into 2016.” The percentage of lenders reporting easing expectations reached a new survey high, according to the survey’s results. More here.

Income Worries May Keep Buyers Cautious

The housing market is set to have its best year since 2007, largely due to an improved economy and labor market. But, despite the gains, home price increases are outpacing income growth and causing prospective buyers to remain cautious, according to the latest Home Purchase Sentiment Index from Fannie Mae. The Index – which measures Americans’ attitudes toward buying and selling a home – fell slightly in November, though it remains at a high level. Doug Duncan, Fannie Mae’s senior vice president and chief economist, said the results are not a surprise. “The latest reading of the Home Purchase Sentiment Index remains near the survey’s high witnessed in June, exemplifying the theme we laid out at the beginning of the year: the economy drags housing upward,” Duncan said. “While aggregate income growth has gradually picked up with a continually improving labor market, consumers’ assessment of their income over the past year has not yet shown sustained improvement, partially weighing on overall sentiment.” Duncan feels that, until Americans feel more financially confident, they may be hesitant to buy. More here.

Experts Expect Rebound As End Of Year Nears

The economy and housing market are showing encouraging signs as the end of the year nears. In fact, according to Fannie Mae’s Economic & Strategic Research Group, the economy should see a strong fourth quarter finish, despite the recent loss of economic momentum. A combination of higher hourly earnings and lower unemployment numbers is making Americans feel more financially stable, which should lead to increased consumer spending. That’s a positive sign for the economy and the residential real estate market as well. “Despite mixed housing and mortgage market data, our forecast for housing activity is little changed over the past two months,” said Fannie Mae chief economist Doug Duncan. “The supply of existing homes remains lean amid slowing new single-family construction, putting significant upward pressure on home prices. While this helps boost home equity, it hurts affordability, especially for potential first-time home buyers.” Fortunately, Fannie Mae is forecasting only a gradual increase in mortgage rates through next year and expects rising household incomes to lessen the impact of higher home prices. More here.

Potential Buyers Feeling Confident But Cautious

Americans feel confident they’re in no danger of losing their jobs but have cooled a bit on the idea of buying a house, according to the most recent results of Fannie Mae’s monthly Home Purchase Sentiment Index. The survey – which asks Americans about their attitudes toward owning a home, price changes, the economy, their finances and more – was virtually flat from the month before but saw a slight decrease in the number of respondents who said now was a good time to buy a home. Doug Duncan, Fannie Mae’s senior vice president and chief economist, said, though Americans feel secure in their jobs, their incomes aren’t growing. “The income growth necessary for renewed momentum in housing market sentiment remains elusive, even though consumers’ confidence in their job security continues to strengthen,” Duncan said. “Consumers’ net view on whether their household income has improved over the last year is down once again this month.” Still, despite the fact that consumers have become slightly more hesitant, the overall index remains near its highest level of the past four years and all indications point to continued strength through the end of the year and into 2016. More here.

Rising Household Net Worth Boosts Economy

Recent data paints a mixed picture of today’s housing market. On the one hand, pending and new home sales both fell in September. On the other, existing-home sales, housing starts, and builders confidence all rebounded. Combined with recent news of economic volatility and slower growth, it may be difficult to figure out where things stand. According to Fannie Mae’s Economic & Strategic Research Group, however, things aren’t as complicated as they may seem. In fact, the group – which releases an updated forecast for the economy and housing market each month – says things are still moving in a positive direction, despite the ups-and-downs found in the latest data. “Despite recent headwinds, which likely will slow economic growth compared to the first half of 2015, we see positive trends for consumer spending and housing heading into the fourth quarter,” Doug Duncan, Fannie Mae’s chief economist, said. “Strong home price gains should help drive an increase in household net worth again in the third quarter, and, combined with low gasoline prices and mortgage rates, should support strong consumer spending throughout the rest of the year.” In other words, the strength of recent price increases has boosted the average American homeowner’s net worth, which should help drive consumer spending and the overall economy through the end of this year. More here.

Confidence In Housing Market Rebounds

Fannie Mae’s Home Purchase Sentiment Index measures Americans’ perceptions of the housing market, including whether they feel it’s a good time to buy or sell a house and their expectations for home prices and mortgage rates over the next year. In September, the Index found consumers are more secure in their jobs and more likely to feel now is a good time to enter the market. “The HPSI returned near its record high this month, driven primarily by improvement in attitudes about selling a home and strengthening home prices,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. “With consumers’ expectations for rental price increases continuing to outpace their expectations for home price growth, many consumers may view homeownership as a more attractive option.” In fact, 64 percent of respondents said they felt like it was a good time to buy a house. Also in the report, the vast majority of Americans say they don’t fear losing their job and nearly a third reported that their household income has gone up significantly over the past year. The combination of increasing financial security and an attractive environment for potential home buyers and sellers indicates that the housing market should see continuing gains in the months ahead. More here.

Lenders Say Credit Standards Have Eased

Fannie Mae’s quarterly Mortgage Lender Sentiment Survey polls senior executives to assess their views and outlook on a number of topics related to the mortgage market. The results provide an insider’s perspective on credit standards, demand, the economy, and more. According to the most recent survey, when asked whether their lending organization’s credit standards have eased, tightened, or remained unchanged over the past three months, the gap between those saying they’ve eased and those reporting stricter standards increased to 20 percent, a new survey high. Doug Duncan, senior vice president and chief economist at Fannie Mae, said it was the first time in seven quarters that there was a pronounced increase in the share of lenders reporting on net an easing of credit standards. “This is a significant result in light of public discourse on credit availability and standards,” Duncan said. “Overall, we expect that lenders’ tendency toward easing credit standards, together with relatively low mortgage rates and a strengthening labor market, will continue to support the housing market expansion.” More here.

Housing On Track Despite Economic Volatility

Fannie Mae’s Economic and Strategic Research Group releases an updated outlook for the economy and housing market each month. Their forecast provides a good view of where things are and where they’re headed. According to this month’s release, recent economic volatility may cause heightened concern on Wall Street but shouldn’t negatively affect economic growth or the progress the housing market has made over the past year. In fact, Fannie Mae points to an uptick in consumer spending, full-time employment surpassing its pre-recession peak, and the fact that average hourly earnings have increased as an indication that the economy will remain on track through the end of the year. Their housing market forecast also remains mostly unaffected by recent data. “Continued strong performance of year-to-date home sales and modestly weakening leading indicators confirm that our prior forecast of existing home sales this year remains valid,” Doug Duncan, Fannie Mae’s chief economist, said. “However, lower actual and projected cash sales led us to revise slightly higher purchase mortgage originations.” In fact, Duncan believes total mortgage originations this year will be up approximately 25 percent over last year. More here.