Consumer confidence remains low

Fannie Mae's October National Housing Survey found American consumers remain pessimistic about home prices, the economy and personal finances, which is holding them back from making purchases in the housing market. In the past 12 months, consumers reported stagnant incomes, and a majority of Americans do not expect their financial situations to improve in the next year, further hampering any economic recovery.

According to the data, 46 percent of consumers expect their financial situations to stay the same in the next 12 months, while 65 percent claim their income is the same as it was a year ago. In terms of the economy, 77 percent say the economy is not on the right track, and 16 percent think the current programs will help the economy recover.

In addition, 36 percent of consumers reported higher expenses compared to 12 months ago, and for the fifth month in a row consumers expect home prices to decline over the next year. Further, 19 percent of consumers predict home prices to increase in the next 12 months, while 23 percent believe home prices will decline and 55 percent say prices will stay the same. As a result, 31 percent of Americans would rather rent their next home than buy, and 66 percent would prefer to own property.

The National Association of Home Builders reported that while consumers remain pessimistic, housing markets showing recovery have increased from 23 metropolitan areas to 30. The recent First American Improving Markets Index dropped two metros from their list of improving housing markets in the last month and added nine new ones, marking the third consecutive month the list showing growth. The new cities added include Cheyenne, Wyoming; Corpus Christi, Texas; and Davenport, Iowa.

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