Getting outbid is the top reason serious house-hunters say is why they can’t buy a home. Nevertheless, about half these long-time searchers intend to keep looking for the “right” home in the same location.
Those conclusions were among findings in the 3rd quarter Housing Trends Report from the National Association of Home Builders (NAHB). The report measures prospective home buyers’ perceptions about the availability and affordability of homes for sale in their markets.
When buyers who had been actively searching for three or more months were asked why they had not been successful, 45% said getting outbid was the primary reason. That marked only the third time in the history of the series that this reason ranked first. In first quarter 2018 when the series started, only 18% blamed bidding wars for their lack of success.
Other reasons preventing prospective purchasers from succeeding in their quest were inability to find an affordably priced home (36%), inability to find a home in the desired neighborhood, and inability to find a home with their most sought-after features.
When asked about their next steps if still unable to find a home in the next few months, about half (49%) of active buyers intend to keep searching for at least three months. Most of these determined buyers said they will continue looking for the ‘right’ home in the same location. The portion who said they will accept a smaller or older home increased to 29%, up from 24% in the second quarter.
Slightly more home seekers (22%) anticipate suspending their search until next year or later when compared to the previous quarter (20%). In Q420, a series high of 28% indicated they would abandon their search temporarily.
NAHB said the share of adults planning a home purchase slipped to 16% during the third quarter, snapping a streak of five straight quarters of increases. It cratered at 10% in the second quarter of 2020.
A comparison of regions showed the West had the only increase in the share of adults with plans to purchase a home, rising from 17% to 19%. The numbers were unchanged in the Midwest (at 13%) and in the South (at 17%), but plunged in the Northeast, dropping from 20% in Q221 to 14% in Q321.
Looking at the intentions by generation, the year-over-year share of Millennials planning a home purchase grew from 22% to 29%. Among Gen Z buyers, the portion grew from 14% to 20%. The numbers for both Gen X and Boomers were flat.
First-time buyers in the mix rebounded from 56% in Q320 to 65% in Q321.
Builders credit the onset of COVID-19 with boosting the demand for newly built homes. In Q118, only 15% of buyers were seeking new construction. By Q420, it surged to 42%, but sharp increases in prices drove down the demand for the past three quarters, settling at 32% in Q321. The share who are classified as ambivalent between new or existing grew from 27% in the fourth quarter of 2020 to 34% in Q321.
The Housing Trends Report, created by the NAHB Economics team, is based on quarterly, online interviews by an independent research firm. Data are based on a national sample of adults selected to proportionately represent the US adult population in terms of age, gender, region, race/ethnicity, and education.