The number of existing-home sales has dropped in four of the past five months, but not because consumers lack confidence about buying or selling, according to the National Association of REALTORS®’ latest Housing Opportunities and Market Experience (HOME) Survey. Renters seem upbeat about purchasing a home, with 62 percent saying now is a good time to buy, according to the survey, which covers data in the third quarter of this year. That share is up from 52 percent in the second quarter.
And as home prices rise, 80 percent of current homeowners say now is a good time to sell—a new survey high. So why are sales fledgling? NAR chief economist Lawrence Yun says some consumers aren’t following through on what they say they’re going to do. “The pace of new-home construction has not meaningfully broken out this year, and not enough homeowners at this point have followed through with their belief that now is a good time to sell,” he says. “As a result, home shoppers have seen limited options, stiff competition, and weakening affordability conditions. Buyer demand is robust this fall, but the disappointing reality is that sales will continue to undershoot their full potential until supply levels significantly improve.”
Still, the survey found that 57 percent of households believe the economy is improving compared to 48 percent a year ago. Households with high incomes, as well as consumers living in more affordable markets in the Midwest and South, express the most optimism in the real estate market, according to NAR’s survey.
More people are feeling confident about their finances, too. “Jobs are plentiful, wage growth is finally showing signs of growth, home values are up considerably in the past five years, and the stock market is at record highs,” Yun says. “The economy is not perfect, and growth overall is still sluggish, but the financial health of the typical household looks healthy.”
But two-thirds of survey respondents say it’s challenging to save for a down payment, which they point to as the main roadblock to buying a home. About half of renters say they expect to pay more in rent next year. “Rents and home prices have outpaced incomes in the past few years, and this is undoubtedly impacting their ability to put aside savings for a home purchase, even if they increasingly believe it’s a good time to buy,” Yun says. “Heading into next year, higher home prices and limited inventory in the affordable price range will likely continue to hold back a share of renters who would prefer to be homeowners.”