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Fewer households believe now is good time to buy or sell a home, surprising representatives with the “Housing Opportunities and Market Experience (HOME) survey.” An independent research firm conducts the quarterly studies for the National Association of Realtors®.
The latest survey, from the fourth quarter of 2017, also found that households are less confident about the economy and their financial situation.
The cooling optimism was unexpected given steady job creation, record stock market gains, and faster economic growth, the NAR noted in a statement. Lawrence Yun, the association’s chief economist, faulted “pitiful supply levels” and weaker affordability conditions as likely reasons for the waning optimist.
“The trifecta of faster economic expansion, robust hiring and low mortgage rates should be generating a surge in optimism and home sales as 2017 winds down,” said Yun upon seeing the data. “Sadly, this is 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.”
The survey, conducted from October through early December, found despite highly favorable sellers’ markets across the country, the share of homeowners who believe now is a good time to sell a home was 76 percent, a decline from the prior quarter’s figure of 80 percent. Even though it dropped, it remained much higher than a year ago when only 62 percent thought it was a good time to sell.
Similar to previous quarters, households in the West continue to be the most optimistic about selling a home but the least optimistic about buying.
The share of renters who believe now is a good time to buy dipped to 60 percent, down from 62 percent for the third quarter, but up from the year-ago number of 57 percent.
Overall the most optimistic segment about buying are current homeowners, households with incomes above $100,000, and those living in the more affordable Midwest and South regions. Respondents living in rural and suburban areas remained more optimistic than urban dwellers.
“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,” Yun said, adding, “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.” He also believes it is very likely more households will feel upbeat about their future if housing supply improves enough next year to boost the nation’s homeownership rate.
Slightly lower economic confidence in the fourth quarter also led to households having slightly diminished feelings about their financial situation. The HOME survey’s monthly Personal Financial Outlook Index, showing respondents’ confidence that their financial situation will be better in six months, fell from 62.0 in September to 59.1 in December. A year ago, the index was 59.8.
NAR’s HOME survey tracks topical real estate trends, including current renters and homeowners’ views and aspirations regarding homeownership, whether or not it’s a good time to buy or sell a home, and expectations and experiences in the mortgage market. New questions are added to the survey each quarter to reflect timely topics impacting real estate.