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Prospective Home Buyers Skittish About Market
Finding Based on Third-Quarter HOME Survey


In the National Association of Realtors' third-quarter Housing Opportunities and Market Experience (HOME) survey, consumers were asked whether now is a good time to buy a home, and the response level to this question has been steadily declining since the beginning of 2016.

Most renters and homeowners feel the time is not right to buy a home because of escalating prices, tight supplies and what they have construed as possible misconceptions about down payment requirements for mortgages, the National Association of Realtors has concluded from a recent survey.

The NAR based its findings on its third-quarter Housing Opportunities and Market Experience (HOME) survey in which respondents were asked about their confidence in the U.S. economy and their housing expectations. The survey also included a series of questions about down payments and how much money they believe is needed to purchase a home.

The share of respondents who believe now is a good time to buy remains at a solid majority, but this has been going down steadily since the beginning of 2016. Seventy-eight percent of homeowners (80 percent in June; 82 percent in March) and 60 percent of renters (62 percent in the previous two quarters) said it's a good time to buy. In the very first HOME survey in December 2015, 68 percent of renters said yes to this question.

The NAR said it believes high home prices and a tight supply of homes are negatively affecting people's mindset about buying homes.

"This summer's historically low mortgage rates injected some additional demand into the market, but the dearth of homes for sale continues to keep a lid on sales but not prices," said Lawrence Yun, chief economist for the NAR. "Given the stiff competition and limited homes available at the lower end of the market, it's not surprising at all that those under the age of 34 and in the West are the least confident about it being a good time to buy."

Through the HOME survey, the NAR also discovered that most of the people polled are misinformed about down payment requirements for mortgages. According to the NAR, fewer than 20 percent in each group said they would need 10 percent or less to finance a home purchase. "Those ages 65 and older (43 percent) and under the age of 35 (37 percent) were the most likely to believe that they need more than 20 percent," the Realtors organization said.

"It's possible some of the hesitation about buying right now among young adults is from them not realizing there are mortgage financing options available that do not require a 20 percent down payment, which would be north of $100,000 in some expensive areas in the country," Yun said. "In fact, most first-time buyers put down much less. In the 35 year history of NAR's Profile of Home Buyers and Sellers -- the longest-running survey series of national housing data -- the average median down payment has been 5 percent for first-time buyers."

NAR President Tom Salomone adds: "Creditworthy prospective buyers should know that many lenders now offer safe, sustainable loans with as little as 3 percent down, and obtaining a mortgage isn't as difficult as it was in the immediate years after the downturn."

A little less than half of the respondents said they believe the economy is improving (48 percent). Meanwhile, nearly two-thirds of those living in rural areas (63 percent) and 61 percent of those over the age of 65 said they don't believe the economy is improving.

The response to the question about whether their financial situation would be better in six months climbed slightly to 58.6 since June (57.7).

More current homeowners (63 percent) believe it is a good time to sell compared to the second quarter of this year (61 percent). This was especially true of respondents in the West; they were the least likely to think now is a good time to sell, the NAR found.

Nearly everyone surveyed (91 percent) said they feel home prices will stay the same or rise in their communities over the next six months. Renters, respondents living in urban areas and those living in the West were most likely to answer yes to this question.

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March 17, 2018, 9:22 am PDT

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Last Updated 03-15-18
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