Economy Watch: Housing Market Optimism Rising
- Oct 10, 2012
In its September 2012 National Housing Survey, Fannie Mae said on Tuesday that Americans’ optimism about the recovery of the housing market and, more broadly, about the idea of homeownership itself continued a gradual climb. The optimism has been bolstered by a series of mortgage rate decreases throughout the summer, and consumer attitudes about the economy also improved substantially last month, as opposed to the waning confidence seen during much of this year.
Among other findings, the survey noted that consumers’ are expecting home prices to rise 1.5 percent over the next 12 months, which is similar to recent months and marking nearly a full year in which home price expectations have been positive. Also, 37 percent of those surveyed expect home prices to go up over the next year, the highest level since the survey’s inception in June 2010. The percentage of respondents who say they would buy property (if they were going to move) increased to 69 percent, tying June 2012 at the highest level since the survey began.
“Consumers are showing increasing faith in the nascent housing recovery,” Doug Duncan, chief economist of Fannie Mae, said in a press statement. “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.”
Housing shadow inventory shrinking
Another bit of positive housing news on Tuesday came from CoreLogic, which reported that U.S. residential shadow inventory as of July 2012 fell to 2.3 million units, representing a supply of six months. This was a 10.2 percent drop from July 2011, when shadow inventory stood at 2.6 million units, which is roughly the same level the country experienced in March 2009.
The company calculates the shadow inventory, also known as pending supply, by including properties that are seriously delinquent, in foreclosure, or held as REO by mortgage servicers, but which aren’t currently listed on multiple listing services. Of the 2.3 million properties in the shadow inventory, 1 million are seriously delinquent, 900,000 are in some stage of foreclosure and 345,000 are already REO.
“The decline in shadow inventory has recently moderated, reflecting the lower outflow of distressed sales over the past year,” CoreLogic chief economist Mark Fleming noted in a press statement. “While a lower outflow of distressed sales helps alleviate downward home price pressure, long foreclosure timelines in some parts of the country causes these pools of shadow inventory to remain in limbo for an extended period of time.”
Employment Index drops
The Conference Board’s Employment Trends Index decreased again in September, following a downward revision in August, the organization said on Tuesday. The index now stands at 107.86, down from the revised figure of 108.23 in August. Still, the September figure is 5.4 percent higher than a year ago.
September’s decline was spurred by negative contributions from five of the eight components. The weakening indicators—beginning with the largest negative contributor—were Ratio of Involuntarily Part-time to All Part-time Workers, Percentage of Firms With Positions Not Able to Fill Right Now, Initial Claims for Unemployment Insurance, Number of Temporary Employees, and Job Openings.
Wall Street took a dive on Tuesday, perhaps worried about dark mutterings about Spainish debt, with the Dow Jones Industrial Average down 110.12 points, or 0.81 percent. The S&P 500 lost 0.99 percent and the Nasdaq declined 1.52 percent.