WASHINGTON (7/8/14)--The recovery of the housing market since the economic downturn in 2008 continues to merely plod along at a slow pace despite rebounding consumer sentiment, according to Fannie Mae's June 2014 National Housing Survey.
Barring several months of record-breaking numbers, Fannie Mae analysts don't expect the market to normalize until at least 2016.
"Since we began collecting monthly National Housing Survey data in June 2010, we've seen substantial progress in consumer home price expectations and other key attitudinal measures as the housing recovery gained its footing," said Doug Duncan, Fannie Mae senior vice president and chief economist. "Still, we do not expect to see 'normal' levels of new residential construction, in the region of 1.6 million new housing units per year, before the end of 2016.
"Such a feat would require a pace of growth in housing starts not seen in decades."
Consumer expectations for home price appreciation rose 2.4% in June, according to the data, which is a small step back compared with recent months. Further, those who expect mortgage rates to climb in the next year jumped 6% to 55% in June.
"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," said Duncan, who added that Fannie Mae now forecasts an annual decline in home sales due to the sluggish first four months of 2014.
"On the bright side, the share of employed consumers who expressed concerns about losing their job dropped to an all-time survey low in June, consistent with last week's upbeat jobs report," Duncan said.
That development could encourage prospective homebuyers to enter the market in the short-term and help offset the weak sales activity from earlier in the year, he said.