Americans are becoming less optimistic about being able to buy a home — reflecting the significant challenges buyers face in today’s market.
A new report from Fannie Mae
found that only 35% of consumers believe it is a good time to buy a home, representing a record low since the mortgage giant began its survey in 2010. Meanwhile, 67% of Americans believe it is a good time to sell a property.
“Consumers appear to be acutely aware of higher home prices and the low supply of homes, the two reasons cited most frequently for that particular sentiment,” Fannie Mae chief economist and senior vice president Doug Duncan said in the report.
Other recent data has reflected how home buyers continue to encounter significant hurdles in making a successful offer on a property. An analysis from Zillow
found that 47% of homes in the U.S. were on the market less than a week before an offer was accepted, and 76% were on the market for less than a month.
‘The already rushed pace of home buying in the face of limited supply and sky-high demand that has characterized the market since last summer has only intensified.’
“The already rushed pace of home buying in the face of limited supply and sky-high demand that has characterized the market since last summer has only intensified with the onset of this year’s busy spring home shopping season,” the Zillow report noted.
Lower mortgage rates
Other research has shown that the inventory of homes for sale remains near a record low. Amid the fierce competition for homes, that low supply is causing prices to hit record highs. While mortgage rates remain around 3%, economists believe that the economy’s continued recovery from the pandemic will eventually spur rates to move higher, increasing the affordability squeeze.
Fannie Mae’s findings were reported as part of Fannie Mae’s broader Home Purchase Sentiment Index, which measures a range of components to capture the likelihood that people will be inclined to buy a home.
While people’s attitudes toward the housing market itself have soured, other components improved, Fannie Mae reported. And that could help to explain why so many people have remained in the market for a home despite all the challenges they otherwise face.
The number of Americans who believe that mortgage rates will stay where they are now increased over the past month from 33% to 38%. Similarly, the percentage of respondents who are not concerned about losing their job over the next year increased from 80% to 87%, while the component measuring people’s household income also improved.
“Despite the challenging buying conditions, consumers do appear more intent to purchase on their next move, a preference that may be supported by the expectation of continued low mortgage rates, as well as the elevated savings rate during the pandemic, which may have allowed many to afford a down payment,” Duncan said.