Consumer confidence about homeownership and the general economy have improved over the last four years, but a return to "normal" housing levels will still take a long time, according to a Fannie Mae survey.
Fannie Mae's national housing survey for June polled 1,000 consumers and showed the majority of Americans believe interest rates will rise in the next 12 months, which deterred hopes for home price appreciation.
The share of respondents who expect mortgage rates to go up in the next year increased six percentage points to 55% in June compared to the previous month. Since February, this statistic has experienced a gradual decline.
On average, survey respondents expect home prices to increase 2.4% during the next 12 months, down from an expected increase of 2.9% in May. Only 46% of respondents think home prices will rise throughout the next year, while 10% anticipate a drop. A year ago, the same question resulted in 57% of respondents expecting home prices to increase and 7% projecting a decline.
The latest S&P/Case-Shiller indices showed home prices in 20 U.S. cities rose at a slower pace than forecast in the year ended in April.
"The uptick this month in the share of consumers expecting mortgage rates to go up and the accompanying decline in home price expectations reflect the pause of activity in the housing market so far this year," said Doug Duncan, senior vice president and chief economist at Fannie Mae, in a release.
With many consumers anticipating an increase in mortgage rates, 70% said now is a good time to buy a house. On the other hand, only 40% think prospective sellers should list their property on the open market.
The survey also showed that 52% of respondents thought it would be easy for them to get a home mortgage today, which matches the all-time high for this monthly survey that began in June 2010.
Furthermore, Duncan projected that "normal" levels of new residential construction, which would be about 1.6 million housing units per year, will not be seen before the end of 2016. Additionally, he expects an annual decline in existing home sales due to weak volume in the first four months of 2014 associated with the rise in mortgage rates last year, along with the current lack of supply of lower-priced homes that are available to purchase.