More than three quarters of Americans think the economy is on the wrong track, as pessimism about the economy, home prices, and household finances continues to deepen, shows Fannie Mae’s August National Housing Survey.

Negative opinion regarding the economy has risen to 78% up from the previous month’s 70%, with only 16% believing it is on the right track. In the same vein, 27% of Americans believe home prices will drop still further, and 22% of those surveyed are expecting their financial situation to worsen in the next year, representing the highest levels pessimism for both indicators since August 2010, says Fannie Mae.

Source: Fannie Mae August 2011 National Housing Survey

“The degree to which consumer attitudes appear to be sensitive to global events is interesting, and seems to be reflected in their view of the economy and their growing overall pessimism,” said Doug Duncan, vice president and chief economist of Fannie Mae, in a statement. “I believe the public was looking at the U.S. debt, deficit, and the ensuing political struggle with one eye, and looking at Europe and their sovereign debt issues with the other eye, and saying: ‘This is not what we want.'”

August was the third month in a row in which survey respondents said they expect home prices to decline over the next year, with an average expectation of a 0.5% drop. It’s no surprise, then, that only 9% believe it’s a good time to sell a home, down from 11% in July. Conversely, August saw an increased number of people saying it’s a good time to buy, up three percentage points from July to 69%.

As far as household finances go, 41% of those surveyed reported significantly higher expenses compared to last year, slightly up from July’s 40%.

Written by Alyssa Gerace