Americans remain skeptical of the economy, but a majority still thinks now is a good time to buy a home and most believe home prices are headed up in 2011, according to the latest Fannie Mae National Housing Survey.

The quarterly survey, conducted between October and December of last year, found that 62% of those polled think the economy is on the wrong track, the same percentage who thought so at the beginning of 2010, and that 65% think now is a good time to buy a house, down five points since last June but flat with January, 2010.

However, those who think home prices will remain flat or move up during 2011 increased to 78% from 73% in January, 2010. These respondents saw home prices increasing 0.4% this year.

Those responses broke down into 26% who believe home prices will go up; 52% who believe they will remain flat; and 19% who see further declines. In the January 2010 survey, 37% saw prices moving up; 36% believed they would stay the same; and 23% foresaw falling prices.

The number of Americans who believe a home is a safe investment fell six points to 64% since January last year, a full 19 points below where that statistic stood in Fannie's 2003 survey. But 84% said they believe owning is smarter than renting, even though the 28% who believe renting makes more sense is up eight points from January, 2010.

The reasons for buying a home remain non-financial, with the quality of local schools (79%) and safety (79%) topping the desire to amortize ownership as opposed to paying rent (61%).

On renting, 39% believe costs will go up in 2011 by an average of 2.8%.

Among demographic groups, 61% of the all-important Gen-Y segment (18-34 years old) sees buying a home as a safe investment and 59% see home ownership as an investment vehicle with good potential. This is despite a decline in that cohort's home ownership rate from 43.7% in the period between 2000 and 2009 to 39.8% in 2009, according to figures from the U.S.Census. The survey put Gen-Y's homeownership rate at 36%, with the rate for Gen X (35-54) at 73%, the Baby Boom at 79% and older seniors at 85%.

"More Americans believe that housing prices will remain stable over the next year," said Doug Duncan, vp and chief economist at Fannie. "We also are seeing encouraging signs in the positive attitudes toward homeownership among younger Americans, despite the severe impact of the housing crisis on Generation Y."

He continued, "But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future."

The survey was based on 3,407 telephone interviews with people 18+ conducted by Penn Schoen Berland. The margin for error was +/- 1.79%.