NEW YORK (MainStreet) — Why won't people get off the fence and buy more homes? The economy's cooking, unemployment is down, stocks just finished another wonderful year and lenders are eager to write mortgages. Yet home sales are sluggish.

A survey by Fannie Mae suggests people, while recognizing conditions are better, just haven't shaken off the shell shock from the Great Recession. It begs the question: What items do you need to check off the list before buying that first home or trading up? (Or down, in the case of many retirees.)

"Despite consistent and robust job growth in recent months, consumer attitudes toward housing remained cautious in the final month of 2014," said Doug Duncan, chief economist at Fannie Mae. "Our survey results show that consumer housing sentiment has, on average, been moving sideways amid some improvement in the general view of the economy."

It's a case of once bitten, twice shy.

"It is not surprising that the housing sector continues to lag behind the rest of the economy given the long-term financial commitment that getting a mortgage represents," Duncan said. "Many prospective homebuyers want to be certain that their personal finances can withstand potential downside risks to the economy."

This caution is especially striking because consumers clearly realize that conditions have improved.

"One notable result in the December survey is that the share of consumers believing that it would be easy to get a mortgage exceeds those saying it would be more difficult to get a mortgage by the widest amount in the survey's history," Duncan said. 

Several of the survey's findings would, under normal circumstances, be expected to push more people into the housing market. Of those surveyed, 46% expected home prices to go up over the next 12 months, compared with only 8% who thought prices would decline. With prices thought unlikely to drop, the risk of buying is small. And if people think prices will rise they ought to buy now rather than later.

Similarly, a growing share of those surveyed, 48%, expected mortgage rates to rise over the next 12 months — another reason to get a loan as soon as possible.

On the other hand, the survey found few people reporting significant increases in income, a factor that could make prospective homeowners cautious.

So what should a prudent prospective homebuyer think about before plunging into the market?

First, how secure is your income? A household is obviously more secure with two breadwinners than one, and especially so if each has a different employer in a different occupation. And risk is probably lower if the local economy is healthy rather than sick.

Second, risk is lower if you plan to stay in the home a long time, allowing you to get past a market slowdown.

Third, making a large down payment can get you a lower mortgage rate and reduce or eliminate mortgage insurance charges. The smaller your monthly payment, the easier it is to survive a financial setback.

Fourth, buying a modestly priced home rather than an expensive one results in a lower payment that's easier to make when times are tough. That will also make it easier to build up a sizable rainy-day fund, or to make extra mortgage principal payments to reduce your debt.

— By Jeff Brown for MainStreet