SEATTLE, Sept. 23, 2014 /PRNewswire/ -- Overall, Americans are more confident in their housing market than at the start of the year, buoyed by optimism among millennials but with tempered expectations in general for future market performance, according to the latest Zillow® Housing Confidence Index (ZHCI)ⁱ. The headline U.S. ZHCI rose to 64.2 over the summerⁱⁱ, up from 63.7 in January, and housing confidence increased among residents of 11 of the 20 major metro areas surveyed.

The ZHCI, sponsored by Zillow and developed by Pulsenomics LLC, is measured on a 0 to 100 scale, with readings above 50 indicating positive sentiment. The headline index is comprised of three sub-indices:

• The Housing Market Conditions Index (HMCI), which measures prevailing market trends and buying/selling conditions.
• The Housing Expectations Index (HEI), measuring expected changes in home values, home affordability and the value of homeownership.
• The Homeownership Aspirations Index (HAI), which measures household home-buying plans and attitudes toward the social value of homeownership.

Both the HMCI and HAI rose in the most recent survey, to 62.1 and 62.7, from 60 and 62.4 in January, respectively. The HEI fell from January, to 66.1 from 66.3. Consumers' expectations for more modest home value growth going forward are in line with Zillow's predictions for slower home value growth over the next year. The Zillow Home Value Forecastⁱⁱⁱ predicts home value growth of 3.1 percent through next August, down from 6.6 percent over the past year.

The ZHCI and all sub-indices are also computed by tenure, to enable measurement and comparison of housing confidence among homeowners and renters. Overall, housing confidence is higher among homeowners than renters, likely owing to historically high rents and favorable home buying conditions.

Analysis of data within the 10,000 completed survey questionnaires used to calculate the ZHCI reveals that younger renters are upbeat about their future home-buying prospects. Among millennial renters (aged 18-34), 82 percent said they were confident or somewhat confident that they will be able to afford to own a home someday, compared to 64 percent of Generation X renters (those aged 35-49) and just 48 percent of Baby Boomer renters (aged 50-64). Millennials overall were also far more optimistic about future home value appreciation. One-third of millennials (33 percent) said they expected home values to rise more than 6 percent per year over the next decade, compared to 21 percent of Generation X and just 15 percent of Baby Boomers.

"It's heartening to see younger renters express so much confidence in their ability to buy a home in coming years, because today's renters by necessity are tomorrow's buyers," said Zillow Chief Economist Dr. Stan Humphries. "Cynics might argue that these results represent no more than youthful exuberance, or perhaps some naiveté, but that's missing the point. We need this generation to be confident and wanting to buy, regardless of the difficulties they face. And there are difficulties, including saving for down payments in the face of high rents and high student debt burdens, uncertain job prospects among younger workers and limited entry-level home inventory. But optimism is a necessary first step, and indicates a desire among a very creative generation to find creative solutions that will enable them to achieve homeownership."

In some respects, millennials' views toward housing may be more conventional than older generations. Almost two-thirds (65 percent) of millennials said they agreed with the statement that owning a home is necessary to living the "good life" and is central to the American dream, compared to 56 percent of Generation X and 55 percent of Baby Boomers. Roughly 46 percent of millennials said they agreed with the statement that owning a home is necessary to be a respected member of society, compared to 38 percent of Generation X and less than a third (30 percent) of Baby Boomers.

"Although strong aspirations are no substitute for financial capacity or creditworthiness on a mortgage loan application, this feedback from millennial renters is significant because it confirms that they bear relatively few psychological scars from the housing bust, and because the attitudes of this generation will drive housing trends in the decades to come," said Pulsenomics Founder Terry Loebs. "Regarding the outlook of renters across all generations, in 14 of the 20 major metro areas in which we conduct our research, a majority of renter households don't believe that right now is a good time to buy a home. However, a larger, two-thirds majority of these 3,764 renter households said that owning a home someday is a specific goal that they are determined to reach, or something that they think about a lot."

About Zillow, Inc.

Zillow, Inc. (NASDAQ: Z) operates the largest home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and data scientists produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgages, Zillow Rentals, Zillow Digs®, Postlets®, Diverse Solutions®, Agentfolio®, Mortech®, HotPads™, StreetEasy® and Retsly™. The company is headquartered in Seattle.

Zillow.com, Zillow, Postlets, Mortech, Diverse Solutions, StreetEasy, Agentfolio and Digs are registered trademarks of Zillow, Inc. HotPads and Retsly are trademarks of Zillow, Inc.

About Pulsenomics:

Pulsenomics LLC (www.pulsenomics.com) is an independent research and consulting firm that specializes in data analytics, new product and index development for institutional clients in the financial and real estate arenas. Pulsenomics also designs and manages expert surveys and consumer polls to identify trends and expectations that are relevant to effective business management and monitoring economic health. Pulsenomics LLC is the author of The Home Price Expectations Survey™, The U.S. Housing Confidence Survey, and The U.S. Housing Confidence Index. Pulsenomics^®, The Housing Confidence Index™, and The Housing Confidence Survey™ are trademarks of Pulsenomics LLC.

ⁱ The ZHCI is computed by Pulsenomics from data compiled by the Zillow-sponsored U.S. Housing Confidence Survey (HCS), consisting of more than 10,000 completed household interviews with adult landline and cellphone users nationwide. This edition of the ZHCI is derived from data collected in the July 2014 edition of the HCS. At a 95% confidence interval, the theoretical margin of sampling error for an aggregated, household-weighted sample of 10,000 (comprised of 20 metro-level probability samples of 500 each) is +/- 1.2%, and larger for sub-groups (e.g., +/- 1.5% for all homeowner households, and +/- 2.0% for all renter households). More than 350,000 consumer responses pertaining to the real estate market where each survey respondent lives are recorded by Pulsenomics to produce each edition of the ZHCI. To view or download all 252 index values that comprise each edition of the ZHCI data set, or to learn more about the ZHCI calculation methodology, please visit Zillow.com/research or pulsenomics.com.
ⁱⁱ HCS interviews were conducted across the 20 metros between July 6 and July 15, 2014.
ⁱⁱⁱ The Zillow Home Value Forecast uses data from past home value trends and current market conditions, including leading indicators like home sales, months of housing inventory supply and unemployment, to predict home values over the next 12 months for the nation and for more than 250 markets across the country.

SOURCE Zillow, Inc.