Tight supply threatens consumer sentiment on home buying
Heading into a competitive spring housing market, optimism that now is a good time to buy hit its lowest share in two years, according to the National Association of Realtors.
In the first quarter of 2018, about 68% of consumers reported that now is a good time to buy a home, down from 75% a year ago and from 72% in the fourth quarter of 2017.
Tight housing inventory continues pushing up home prices and discouraging borrowers already conflicted with rising mortgage rates. And with starter homes becoming less available and in even poorer conditions, this could mean fewer homeowners will enter the market this year.
Consumers are also concerned about qualifying for a mortgage, presenting an opportunity for lenders to educate potential borrowers on their options. About 34% of non-homeowners conclude it will be very difficult to qualify for a mortgage, up from 27% from a year ago.
Many would-be homebuyers feel forced to continue renting, and specifically cite financial challenges, such as saving for a down payment, as hurdles preventing them from a home purchase. For renters, optimism on home buying fell 5 percentage points from last quarter to 60%.
A positive outcome of rising home prices is that more consumers are reporting it's a good time to sell. If more homeowners are confident about selling, this could help open up a market thirsty for more supply, and potentially pave the way for cooling housing costs.
About 74% of people claim that now is a good time to sell a home, up significantly from 56% in the first quarter of 2016.
NAR's Housing Opportunities and Market Experience survey tracks homeowner and renter views on the real estate and mortgage markets. Data is collected monthly.