Even with buyer and seller confidence at a record-breaking high, a new survey from the National Board of REALTORS® (NAR) shows that there are few sales to show for it.
Buyers and sellers both responded to NAR’s Housing Opportunities and Market Experience survey with record-breaking confidence; 80 percent of homeowners believe now is a great time to sell, while 62 percent of renters agree now is a good time to buy. With so much certainty, the lack of sales can be puzzling. NAR Chief Economist, Lawrence Yun, points to the continued lack of inventory.
“The housing market has been in a funk since early spring because of the ongoing scarcity of new and existing homes for sale. 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. 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.”
Further complicating the matter is the current reality of renting a home. Fifty-one percent of renters expect a rent increase in the next year, but only 15 percent indicate that they would buy a home, while 42 percent claim that they would renew their lease. Affordability of homes on the market, coupled with rising rents, means that current renters are simply unable to save enough money for a down payment.
“Even though the typical payment of a first-time buyer has been 6 percent for three straight years, two-thirds of respondents indicated that saving for one is difficult right now,” explains Yun. “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. 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.”
Even though current renters are having a hard time saving for a down payment on a first home, there is still a reason to look to the future. Yun says, “Jobs are plentiful, wage growth is finally showing signs of life, home values are up considerably in the past five years and the stock market is at record highs. The economy is not perfect, and growth overall is still sluggish, but the financial health of the typical household looks as healthy as it has since the recession.”