Homebuyers and sellers are confident in the housing market, but there are few sales to show for it, according to recently released findings from a survey by the National Association of REALTORS®.
The report reveals homebuyers and sellers are stuck in neutral, despite a record 80 percent of homeowners surveyed for the report believing now is a good time to sell and 62 percent of renters believing now is a good time to buy. Low inventory is behind the stall, says NAR Chief Economist Lawrence Yun.
“The housing market has been in a funk since early spring because of the ongoing scarcity of new and existing homes for sale,” Yun says. “The pace of new-home construction has not meaningfully broken out this year, and not enough homeowners at this point have followed through with their belief that now is a good time to sell. As a result, home shoppers have seen limited options, stiff competition and weakening affordability conditions. Buyer demand is robust this fall, but the disappointing reality is that sales will continue to undershoot their full potential until supply levels significantly improve.”
Buying a home is already a pipe dream for many renters—and pushed even further out of reach by rising rents, the report shows. Fifty-one percent of renters expect their rent to increase in the next year, but 42 percent would renew their lease, rather than buy a home, if their rent did go up. (Only 15 percent would buy a home.)
“Even though the typical down payment of a first-time buyer has been 6 percent for three straight years, two-thirds of respondents indicated that saving for one is difficult right now,” says Yun. “Rents and home prices have outpaced incomes in the past few years, and this is undoubtedly impacting their ability to put aside savings for a home purchase, even if they increasingly believe it’s a good time to buy. Heading into next year, higher home prices and limited inventory in the affordable price range will likely continue to hold back a share of renters who would prefer to be homeowners.”
More of those surveyed (57 percent) believe the economy is improving, however—optimism that could potentially translate into more earnings, and, by extension, more housing opportunities. The survey’s Personal Financial Outlook Index, which gauges respondents’ sentiment on their financial situation over the next six months, leapt up to 62.0 in September.
“Jobs are plentiful, wage growth is finally showing signs of life, home values are up considerably in the past five years and the stock market is at record highs,” Yun says. “The economy is not perfect, and growth overall is still sluggish, but the financial health of the typical household looks as healthy as it has since the recession.”