Consumer confidence in the housing market plunged to an all-time low last month in the wake of the government shutdown, finds the Fannie Mae October 2013 National Housing Survey.
The share of people who believe it’s a good time to buy a house had the biggest ever one-month change, according to the survey, falling to a survey-low of 65%. However, the share of respondents who indicated they would buy a home in the event they moved actually increased slightly to 70%, a new survey high.
Less than half of respondents (46%) believe home prices will go up in the next 12 months, down six percentage points from September, while those saying home prices will fall increased by four percentage points to 10%.
“Housing market sentiment has clearly suffered in the wake of the recent government shutdown and debt ceiling debate,” said Doug Duncan, senior vice president and chief economist at Fannie Mae, in a statement. “In October, we saw attitudes toward both the economy and the current buying environment experience their largest one-month drops in the survey’s three-year history.”
The decline in consumer optimism may foreshadow a slowing of the housing recovery, Duncan continued, but because of supply constraint, Fannie Mae predicts continued positive growth in home prices.
Only 27% of respondents believe the economy is on the right track, according to Fannie Mae, down 12 percentage points form September—the biggest monthly record change in the survey’s history.
“October’s survey results suggest that consumer attitudes are highly responsive to ongoing debate and decision-making in Washington,” said Duncan. “Three key budget and debt ceiling dates loom in December, January, and February. The handling of each will likely play a key role in determining the pace and timing of any recovery in consumer sentiment.”
Written by Alyssa Gerace