Homebuyers are losing confidence in the housing market, but their economic optimism remains steadfast. The latest Housing Opportunities and Market Experience (HOME) survey from the NAR found that 4% fewer buyers think it is a good time to buy now compared to the fourth quarter of last year.
Additionally, the survey found that homebuyers are more optimistic about the overall economy and their financial situation, despite an unwelcoming housing market. Respondents below the age of 35 (i.e. millennials) showed the least confidence in the housing market, while older respondents were significantly more optimistic.
- Buyers who said it is a good time to buy fell from 72% to 68% in Q1 2018
- Only 55% of millennials said it was a good time to buy, compared to 84% of those age 55-64
- Home prices are up 5.9% through the first two months of 2018
- The critical shortage of listings and dropping affordability are chipping away at homebuyer optimism
Positive attitudes toward home buying still predominated in the National Association of Realtors® (NAR) most recent Housing Opportunities and Market Experience (HOME) survey, but they are softening. “Yes” responses to the question of whether it is currently a good time to buy dropped from 72 percent in the fourth quarter of 2017 to 68 percent in the first quarter of this year, with 5 percentage points of the decline coming from those who “strongly” felt it was a good time.
NAR said the survey’s findings “surprisingly show that while a growing share of households in the first three months of the year feel more confident about the economy and their financial situation, those positive feelings are not translating to positive views that now is a good time to buy a home.”
The positive answers were strongest among the older respondents (84 percent among those 55 to 64 and 77 -percent for those older than 65) while only 55 percent of those below the age of 35 i.e. Millennials, concurred.
Positive responses rose with income and there were strong regional differences – three regions had responses ranging from 67 to 74 while only 58 percent of those living in the West viewed it as a good time to buy. Rural consumers had a 78 percent positive response rate compared to 69 percent of suburbanites and 59 percent living in cities. Homeowners were much more positive (76 percent) than renters (55 percent) or those living with someone else (60 percent).
Responses to a similar question about selling a home rose from 71 percent in the previous survey to 74 percent with the increase coming from those who held moderate convictions. Age had little influence – every age group but one, the 55 to 64 group at 80 percent, had 72 percent positive responses.
Sixty percent of people believe the U.S. economy is improving, up from 52 percent the fourth quarter of last year. Those living in rural areas, in the South, or with the highest incomes were the most positive as were those 55 to 64 years of age.
“The jump in optimism to start the year can be attributed to the robust job creation in most of the country, as well as the larger paychecks households are enjoying because of faster wage growth and the recent tax cuts,” said NAR chief economist Lawrence Yun. “These three positives should further ignite buyer demand. However, several metro areas with the healthiest labor markets also have the most severe supply and affordability pressures. This troublesome reality is what’s dampening moods and keeping many would-be buyers at bay.”
View the original article at Mortgage News Daily