The number of existing-home sales has lessened over the last few months, but a new survey from the National Association of Realtors® (NAR) shows that the decline in sales is not because consumers lack confidence with regard to buying or selling a home. NAR’s third quarter Housing Opportunities and Market Experience (HOME) survey results also indicate consumers are not worried about the direction of the economy and their finances.
According to the survey, the primary deterrent in purchasing a home is saving for a downpayment. The survey results show that two-thirds of households think saving for a downpayment is challenging.
Even still, it appears that renters in this past quarter believe it’s a good time to purchase a home. After dropping to approximately 52 percent of renters last quarter, the share that believes it is a good time to buy increased to 62 percent (from 60 percent one year ago). Across the board, current homeowners (80 percent), households with incomes at the high end, and those living in the more affordable Midwest and South areas of the United States are the most optimistic about purchasing a home right now.
The number of homeowners who also think that now is a good time to sell is also increasing. Eighty percent of homeowners think now is a good time to list their home for sale, which is up from 75 percent last quarter and up from 67 percent a year ago.
NAR’s Chief Economist Lawrence Yun says it is positive news that homebuyer and seller optimism is advancing. “The housing market has been in a funk since early spring because of the ongoing scarcity of new and existing homes for sale,” Yun says. “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 seem limited options, stiff competition and weakening affordability conditions,” Yun added.
More households (approximately 57 percent) believe the economy is improving compared to the second quarter (54 percent) and one year ago (48 percent). Moving forward with a turnaround from one year ago, those living in rural and suburban areas had more positive viewpoints regarding the economy than the survey respondents who reside in urban areas. A large portion of homeowners and those with incomes above $50,000 also had a positive outlook on the economy.
The recovery in economic confidence this quarter is also reportedly offering households with an increased amount of assurance regarding their financial situation. The HOME survey’s monthly Personal Finance Outlook Index, which clearly shows that respondent’s feel their financial situation will improve over the next six months, increased from 57.2 in June to 62.0 in September. One year ago, the index stood at 58.6.
“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,” says Yun. “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,” added Yun.