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Is now a good time to purchase a home?

Expert says declining mortgage rates are heating up the market

It’s almost spring homebuying season, and new data from the National Association of Realtors indicates Americans are ready to purchase homes.

According to the group's Q1 HOME survey, 37% of Americans strongly believe now is a good time to buy a home.

Although this percentage is slightly down from last year’s 38%, it’s still up from 34% in the last quarter of 2018.

NAR Chief Economist Lawrence Yun said several factors are helping to improve the attitudes of potential homebuyers.

“First, inventory has been rising, so those buyers interested in making a purchase will not be limited in choices,” Yun said. “Additionally, more stable home price trends are leading to more foot traffic at various open house gatherings.”

In fact, the share of respondents who believe local home prices have risen over the year fell from 63% in Q1 of 2019.

Furthermore, when respondents were asked about their perceptions regarding local home prices in the near future, 43% said they expect prices to stay the same over the next six months.

Even though this is up 2% from last quarter, a whopping 47% still believe prices will rise in the coming six months.

Interestingly, these expectations differ depending on housing market, as those who live in the Northeast and South earning between $50,000 to $100,000 are more likely to believe in coming price hikes, according to NAR.

However, Yun notes the West is experiencing the most variation in expectations surrounding home prices.

“A high percentage of the Western population believes that prices increased in the past year, while – possibly for the same reason – a higher segment from the West compared to other regions say prices could fall in the next 12 months,” Yun continued. “As to the broader economy, the perception is weaker and showing cracks in the Midwest.”

That being said, Yun indicates mortgage affordability has made the overall market more favorable for would-be homebuyers.

“The Federal Reserve’s decision to refrain from any foreseeable rate hikes was beneficial to potential buyers,” Yun said. “That move directly contributed to mortgage rates declining in quarter one, which provided a second-chance opportunity to those looking to buy who were priced out last quarter.” 

NOTE: The National Association of Realtors HOME Survey was administered through TechnoMetrica. The survey was conducted from January 2019 through March 2019 and represents a total of 2,710 household responses.

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