Despite uncertainty about the economy, consumer sentiment about the real estate market remained strong, according to Fannie Mae.
The government-sponsored enterprise's October National Housing Survey showed respondents expect home prices to increase 1.7 percent in the next 12 months. Additionally, the share who believe home prices will decline fell to 10 percent, which is the lowest level in the survey's history.
However, the percentage of people who believe mortgage rates will increase jumped 4 percentage points to 37 percent.
"This has been a year of steady growth in the percentage of consumers with positive home price expectations," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Increasing household formation, encouraged by an improving labor market, is adding additional momentum to the housing recovery."
Even though respondents believe mortgage rates will rise, the third round of quantitative easing set in place by the Federal Reserve could help keep them affordable for many years. According to Freddie Mac, 15-year fixed-rate mortgages averaged 2.7 percent in the week ending November 1, while 30-year FRMs averaged 3.39 percent.
