Although the housing market often slows in the fall and winter months, the results of a recent survey indicates consumers are very positive about the future of real estate.
Property data shows homes prices experienced notable gains so far this year, and the average household expects prices to appreciate an additional 1.5 percent by the end of 2012, according to a survey from Fannie Mae.
"Consumers are showing increasing faith in the nascent housing recovery," said Fannie Mae senior vice president and chief economist Doug Duncan. "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."
Even though the Federal Reserve recently implemented QE3, which is meant to keep mortgage rates near current levels until at least 2015, the survey found close to 33 percent of respondents believe rates will increase significantly in the next year. However, this was a 7 percent decrease from the previous month.
Consumer finances improving
The positive sentiment toward the housing market could be the result of increased consumer optimism in September.
During the month, 41 percent of Americans said they believe the economic recovery is currently on the right track and this momentum is expected to continue in the near future. This may result in improved employment, which could yield additional consumer spending.
Along with the economy, 44 percent of households anticipate their personal financial standing to improve during the next 12 months, the survey found. This was an increase from 42 percent in August.
An improvement in the financial standing of potential homebuyers could result in additional mortgage activity in the coming months. Because so many consumers expect rates to increase, they may choose to capitalize on fixed mortgage rates while they are at all-time lows.
Mortgage records show during the week ending October 4, the average rate for a 30-year FRM dropped to 3.36 percent, from 3.4 percent a week earlier, according to a report from Freddie Mac. Meanwhile 15-year FRMs averaged 2.69 percent, also a notable decline from the previous week.
"Fixed mortgage rates fell again this week to all-time record lows due to the mortgage securities purchases by the Federal Reserve and indicators of a weakening economy," said Freddie Mac vice president and chief economist Frank Nothaft.