Fewer people in the United States think now is a good time to buy or sell
Despite steady job creation and faster economic growth in recent months, fewer people in the United States think that now is a good time to buy or sell a home.
Optimism among renters about buying a home appears to be slightly softening, down to 60% in the fourth quarter of 2017 believing it is a good time to buy from 62% in the previous quarter.
The survey from the National Association of Realtors (NAR) also shows that overall, among the most optimistic about buying are current home owners at 79%, down from 80% in the previous quarter along with households with incomes above $100,000 and those living in the more affordable Midwest and South regions.
According to NAR chief economist Lawrence Yun, pitiful supply levels and weaker affordability conditions are likely casting a doubt that now is a good time to buy despite the nation seeing faster economic expansion, robust hiring and low mortgage rates.
He explained that the current economic and financial climate should be generating a surge in optimism and home sales as 2017 winds down but this not the case. ‘While overall demand remains high, it is not translating to meaningful sales gains. Too many prospective first time buyers see few options within their budget and home prices that are rising much faster than their incomes,’ he said.
‘Until we start seeing a steady increase in new and existing inventory, sales will fail to deliver on their full potential and many would-be first-time buyers will be forced to continue renting,’ he added.
Despite highly favourable sellers’ markets across the country, the share of home owners who believe now is a good time to sell a home decreased this quarter to 76% from 80% although it is still much higher than a year ago when it was 62%. Similar to previous quarters, households in the West continue to be the most optimistic about selling a home and the least optimistic about buying.
‘The good news for possible inventory gains heading into 2018 is the fact that a much larger share of homeowners compared to a year ago think it’s a good time to sell. However, the decline in the latest quarter is worth monitoring,’ Yun said.
He added that real estate agents say the lack of new home construction in their markets is making many potential trade-up buyers hesitant about putting their home on the market out of fear they won’t find another property to buy. ‘This indecisiveness only exacerbates tight inventory conditions and slows housing turnover,’ he explained.
Even with the economy expanding above 3% in the last two quarters, as well as another year of solid job gains, some 52% of households believe the economy is improving compared to 57% in the third quarter and 54% a year ago. For a fourth quarter in a row economic optimism from respondents living in rural and suburban areas outpaced those residing in urban areas.
‘The significant rise in home values and the stock market at record highs are why a majority of home owners, as well as those with incomes above $100,000, are more optimistic about the economy than renters and those with lower incomes,’ said Yun.
‘The overall job market and economy are very healthy. If housing supply improves enough next year to boost the nation’s home ownership rate, it’s very likely more households will feel upbeat about their future,’ he concluded.