Amidst the ongoing climb in home prices in most markets, the share of homeowners who believe now is a good time to sell increased to 77 percent in the first quarter (76 percent last quarter), which is second only to last year’s third quarter (80 percent) as the highest overall share since the HOME survey began in December 2015. A year ago, 69 percent of homeowners thought it was a good time to sell.
“There’s no question that a majority of homeowners have amassed considerable equity gains since the downturn. Home prices have grown a cumulative 48 percent since 2011 and are up 5.9 percent through the first two months of this year,” said Yun. “Supply conditions would improve measurably, and ultimately lead to more sales, if a growing number of homeowners finally decide that this spring is the time to list their home for sale.”
Consumers feeling more upbeat about the economy and their financial situation
Although optimism was a tad higher a year ago (62 percent), more households in the first quarter of this year (60 percent) believe the economy is improving compared to the fourth quarter of 2017 (52 percent). Homeowners, residents from the South and those from rural areas were the most optimistic about the direction of the economy.
Stronger economic confidence this quarter also led to households having improved feelings about their financial situation. The HOME survey’s monthly Personal Financial Outlook Index2, showing respondents’ confidence that their financial situation will be better in six months, rose from 59.1 in December to 62.0 in March. A year ago, the index was slightly higher (62.6).
“The jump in optimism to start the year can be attributed to the robust job creation in most of the country, as well as the larger paychecks households are enjoying because of faster wage growth and the recent tax cuts,” said Yun. “These three positives should further ignite buyer demand. However, several metro areas with the healthiest labor markets also have the most severe supply and affordability pressures. This troublesome reality is what’s dampening moods and keeping many would-be buyers at bay.”
Income, debt and anxiety hold back some non-homeowners from buying
In this quarter’s survey, non-homeowners were also asked about the barriers preventing them from saving for a down payment. Limited income (47 percent), student loan debt (30 percent), and rising rents (28 percent) were the top three obstacles cited, followed by health and medical costs (14 percent). Only 14 percent also said that nothing was holding them back from saving for a down payment.
Non-homeowners were also asked for the potential reasons why qualifying for a mortgage would be difficult. Income uncertainty (45 percent), a low credit score (34 percent) and too much debt (26 percent) were mentioned the most. Twenty-nine percent said they lacked the financial knowledge or did not know the first step needed to qualify.
“It’s never too early for those wanting to own a home in the future to sit down with a lender to discuss their current financial situation,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty. “Homeownership could be a more attainable goal once an interested buyer finds out how much they can afford to buy, as well as what steps, if any, are needed to improve their chances of obtaining a mortgage.”
About NAR’s HOME survey
In January through early March, a sample of U.S. households was surveyed via random-digit dial, including a mix of cell phones and land lines. The survey was conducted by an established survey research firm, TechnoMetrica Market Intelligence. Each month approximately 900 qualified households responded to the survey. The data was compiled for this report and a total of 2,702 household responses are represented.
The National Association of Realtors® is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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1NAR’s Housing Opportunities and Market Experience (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.
HOME survey data is collected on a monthly basis and will be reported each quarter. New questions will be added to the survey each quarter to reflect timely topics impacting the real estate marketplace.
Index ranges between 0 and 100: 0 = all respondents believe their personal financial situation will be worse in 6 months; 50 = all respondents believe their personal financial situation will be about the same in 6 months; 100 = all respondents believe their personal situation will be better in 6 months.