Reports that home prices are rising have boosted confidence to record-high levels both among buyers and sellers. Among respondents to a survey by mortgage insurer Fannie Mae, 40% believe that now is a good time to sell a house and 76% say that now is a good time to buy a house. Sellers are getting better prices, and buyers are beating the rush, which will only drive prices higher.
The Fannie Mae survey also notes that the average home price will rise 3.9% in the next 12 months, up from last month's expected 12-month price hike of 2.7%. That is the highest price change expectation Fannie Mae has recorded in the three years it has conducted this survey.
The rise in home prices may have a small downside though. According to Fannie Mae's chief economist:
This jump may foreshadow a gradual return to more normal levels of housing supply from their lows of recent months. In turn, increased housing supply could serve to temper increasing consumer home price expectations.
Nearly half of survey respondents (46%) also expect mortgage rates to rise, and only 5% expect rates to drop. More than half (55%) expect home prices to rise in the next 12 months, while only 7% expect prices to fall, a new survey low.
Rents also are expected to rise by 3.4% in the next 12 months. That is the smallest expected rise since last September. A total of 48% expect rental prices to rise in the next year.
The big question remains whether housing inventories have reached a bottom. Existing home inventory is up 15.5% so far this year, well above the 5% levels of the past couple of years. As inventory increases, prices increases will slow down. But that day could still be a ways off.
Filed under: 24/7 Wall St. Wire, Economy, Housing, Research