In four of the past five months, including the most recent report in August, showed existing home sales continue to fall, however this is not due to a lack of confidence from consumers about home buying and selling.
The third quarter brought a rebound in consumer sentiment on the housing market, according to the Housing Opportunities and Market Experience survey from the National Association of Realtors.
After dropping to just 52% of renters in the second quarter, the share of renters who believe now is a good time to buy increased to 62% in the third quarter, the survey found. This is also up from 60% of renters in the third quarter last year.
Overall, sentiment is the highest among current homeowners, households with higher incomes and those living in the affordable Midwest and South regions. The share of homeowners who said now is a good time to sell increased to 80%, a new survey high. This is up form 75% last quarter and from 67% last year.
“The housing market has been in a funk since early spring because of the ongoing scarcity of new and existing homes for sale,” NAR Chief Economist Lawrence Yun said. “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,” Yun said. “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.”
In July through early September, a sample of U.S. households was surveyed via random-digit dial, including a mix of cell phones and land lines. The survey was conducted by survey research firm, TechnoMetrica Market Intelligence. Each month approximately 900 qualified households responded to the survey. The data was compiled for this report and a total of 2,709 household responses are represented.
The survey showed despite these gains in confidence, Americans continue to struggle in the competitive housing market. About two-thirds of households responded that saving for a down payment is challenging and about half of renters said they expect to pay more in rent next year.
The number of households who said the economy is improving increased to 57% in the third quarter, up from 54% last quarter and 48% last year. The positive outlook was amplified among those living in suburban areas and those with incomes above $50,000 per year.
“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 said. “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.”
However, once again, the reality is that most non-homeowners do not plan on buying a home anytime soon, despite their confidence that now is a good time to buy. NAR’s survey showed over half of renters believe their rent will increase within the next year.
However, they also answered that if their rent does increase, 42% will still resign their lease or move to a cheaper rental. Only 15% of renters answered that they would consider buying a home.
“Even though the typical down payment of a first-time buyer has been 6% for three straight years, two-thirds of respondents indicated that saving for one is difficult right now,” Yun said. “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,” he said.