US residents believe home prices will continue to rise

Dive Brief:

Americans are optimistic about home prices, with 61% of U.S. adults anticipating that local housing prices will go up during the next 12 months, a Gallup poll found. That's up from 55% in 2016 to the highest level since 2005 (70%), and it is a significant jump from 2009, when just 22% believed prices would rise.
On a regional level, optimism about local housing prices was highest in the West (74%), followed by the South (61%). Fifty-four percent of U.S. residents in the East and 53% in the Midwest expect prices to rise.
The survey also weighed outlook on homebuying: 67% of respondents think it’s a good time to buy, on par with expectations over the last two years. Purchasing optimism was slightly higher, at 70%, from 2012 to 2014.

Dive Insight:

Americans’ expectations about home prices coincide with what’s happening in the market. The latest numbers from CoreLogic show a 1% increase in home prices from January to February and a 7% increase year-over-year. And like the high optimism in the West in Gallup’s poll, that region is home to six of the nine states whose prices rose more than the year-over-year national average.

Overall, homeowner optimism is on the rise, with 69% saying now is a good time to sell a home, according to a recent survey by the National Association of Realtors, which mirrors the Gallup results. Consumer confidence is also climbing, reaching its highest level in more than 16 years in March.

Builder confidence, on the other hand, dipped in April, though the National Association of Home Builders reports the index tracking that sentiment remains strong.

One concern Gallup indicated in its analysis is that a continued rise in home prices could combine with increasing mortgage interest rates to create another housing bubble. However, continued employment and income growth, along with tighter lending, supports the notion that, this time around, home-price growth is on more solid footing with double-digit price increases tapering in many markets.

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