Renters' Uncertainty Increasing about Potential Homeownership

Washington, DC, September 15, 2016—Lofty home-price growth and tight supply are leading to softening confidence among renters about whether it’s a good time to buy a home, according to the latest installment of the National Association of Realtors Housing Opportunities and Market Experience (HOME) survey.

The survey also found that a misconception about how much of a down payment is needed to buy could be unnecessarily delaying some qualified young adults from entering the market.

In NAR’s third quarter HOME consumer survey, respondents were asked about their confidence in the U.S. economy and various questions about their housing expectations, including a series of questions related to down payments and the amount of money they believe they need to purchase a home.

Heading into the autumn months, the share of homeowners and renters who believe now is a good time to buy remains at a solid majority but has crept downward since the beginning of this year. Seventy-eight percent of homeowners (80% in June; 82% in March) and 60% of renters (62% in the previous two quarters) said it’s a good time to buy. In the inaugural HOME survey in December 2015, 68% of renters said it was a good time to buy.

Lawrence Yun, NAR chief economist, says it’s clear the ongoing run-up in home prices and severe inventory shortages in a large portion of the country are hitting consumer psyche – especially among renters. “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,” he said. “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.” 

Adds Yun, “Very affordable mortgage rates and strong job gains among young adults should be translating to a higher rate of homeownership. It’s not, and as a result, sales to first-time buyers remain stuck below a third of all sales.”

More information is available here: http://www.realtor.org/reports/2016-q3-homeownership-opportunities-and-market-experience-home-survey.