High Home Prices Is Main Reason Active Buyers Can’t Seal the Deal

2022-08-04T09:16:36-05:00

By Rose Quint on August 4, 2022 • An earlier post revealed that 63% of buyers who were actively engaged in the process of finding a home in the 2nd quarter of 2022 have spent 3+ months searching for a home without success. The most common reason these long-term searchers cite for not having bought by now is their inability to find an affordable home (43%).  In second place is getting outbid by other buyers (35%), followed by the inability to find a home in a desirable neighborhood (32%), or a home with desirable features (29%). When asked what they are most likely to do next if still unable to find a home in the next few months, 46% of active buyers searching for 3+ months said they will continue looking for the ‘right’ home in the same location (down from 52% a quarter earlier); 38% will expand their search area (unchanged), 30% will accept a smaller/older home (up from 20%), and 26% will buy a more expensive home (up from 19%) Meanwhile, the share who plan to give up their home search until next year or later was unchanged at 25% between the first and second quarters of 2022.  This share has increased or remained flat in each of the past four quarters. **Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the final post in a series of six highlighting results for the 2nd quarter of 2022. Related ‹ Housing Share of GDP Edges Lower in the Second Quarter of 2022Tags: housing economics, housing trends report

High Home Prices Is Main Reason Active Buyers Can’t Seal the Deal2022-08-04T09:16:36-05:00

More Prospective Buyers Are Actively Searching for a Home

2022-08-03T09:18:22-05:00

By Rose Quint on August 3, 2022 • The share of prospective home buyers who are actively engaged in the process to buy a home rose to 49% in the second quarter of 2022, after declining for three straight quarters.  The pivot is likely driven by less competition from buyers who have exited the market, which has encouraged many of those remaining to become active buyers. Except for the South, the share of prospective buyers actively searching for a home rose in every region between the first and second quarters of 2022: Northeast (50% to 54%), Midwest (40% to 51%), and West (46% to 57%). In the second quarter of 2022, the share of active buyers who have been looking for a home for 3+ months fell to 63%, down from 67% in the previous quarter.  The share is at its lowest point in almost two years (since the third quarter of 2020, when it was 62%). Before the pandemic (between the first quarters of 2018 and 2020), fewer than 60% of active buyers shopped for a home for 3+ months. **Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the fifth in a series of six posts highlighting results for the 2nd quarter of 2022. Related ‹ Second Quarter of 2022 Homeownership Rate at 65.8%Tags: housing economics, housing trends report

More Prospective Buyers Are Actively Searching for a Home2022-08-03T09:18:22-05:00

The Mix of Home Buyers Is Changing, Leading to Improved Affordability

2022-08-02T09:17:42-05:00

By Rose Quint on August 2, 2022 • For the first time since 2020, affordability expectations improved in the second quarter of 2022.  After rising steadily for five straight quarters, the share of buyers who can only afford a minority of the homes for sale in their markets declined to 77%, down from 81% a quarter earlier.  Conversely, the share able to afford at least half the homes available rose from 19% to 23%.  A likely reason for the pivot is that the exit of 1st-time home buyers from the market is tilting the composition of the pool of buyers towards wealthier buyers better able to absorb recent increases in mortgage rates. Affordability expectations between the first and second quarters of 2022 improved in two regions.  In the West, the share of buyers only able to afford a minority of homes dropped from 78% to 70%; and in the Northeast, from 77% to 73%.  The share edged up in the Midwest (83% to 84%) and in the South (79% to 82%). **Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the fourth in a series of six posts highlighting results for the 2nd quarter of 2022. Related ‹ Private Residential Spending Declines in JuneTags: housing economics, housing trends report

The Mix of Home Buyers Is Changing, Leading to Improved Affordability2022-08-02T09:17:42-05:00

Buyers’ Expectations of Housing Availability Improve

2022-08-01T09:16:25-05:00

By Rose Quint on August 1, 2022 • For the first time since 2020, prospective buyers expect housing availability to improve.  After falling steadily for five quarters, the share expecting the home search to get easier in the months ahead grew from 17% to 22% between the first and second quarters of 2022.  Less competition from buyers priced-out of the market by recent increases in mortgage rates is likely driving this improvement.  In contrast, 67% expect the search to get harder/stay the same, down from 74% a quarter earlier. Housing availability expectations improved in all regions except the Midwest.  In the West, 31% of buyers expect easier conditions, up from 18% a quarter earlier. In the Northeast, the share rose from 22% to 28%; in the South, from 17% to 18%; while in the Midwest, it edged down from 15% to 14%. Another measure confirms that buyers’ perceptions of housing inventory pivoted in the second quarter of 2022.  After declining for five straight quarters, the share of buyers seeing more homes available for-sale* in their markets turned around in the second quarter of 2022, rising to 28% from 23% a quarter earlier. Across regions, inventory perceptions improved or remained unchanged.  From the first to the second quarter of 2022, the share of buyers seeing more homes on the market rose in the West (23% to 36%) and the Midwest (21% to 23%), while remaining the same in the NE (27%) and SO (24%). ** Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the third in a series of six posts highlighting results for the 2nd quarter of 2022. Related ‹ Inflation Causes Real Disposable Income to Slip in JuneTags: housing economics, housing trends report

Buyers’ Expectations of Housing Availability Improve2022-08-01T09:16:25-05:00

Some Buyers Turning to New Construction

2022-07-29T09:23:55-05:00

By Rose Quint on July 29, 2022 • After falling steadily for five quarters, the popularity of new homes rebounded in the second quarter of 2022, as 21% of prospective buyers reported looking for a newly-built home – up from 19% a quarter earlier.  A possible reason for this pivot is the recent growth in the inventory of new homes for-sale, while the supply of existing homes on the market remains very tight. Regionally, the increased interest for new homes is driven entirely by the West, where the share of buyers looking to buy a newly-built home rose from 24% in the first quarter of 2022 to 30% in the second quarter. In contrast, the share declined in all other regions during this period. * Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here. This is the second in a series of six posts highlighting results for the 2nd quarter of 2022.  Related ‹ The Second Quarter of Negative Growth: A Recession?Tags: housing economics, housing trends report

Some Buyers Turning to New Construction2022-07-29T09:23:55-05:00

Latest Interest Rates Signal Significant Declines in Affordability

2022-05-12T10:18:32-05:00

Housing affordability in the first quarter of 2022 looks starkly different depending on the interest rate assumed in the calculation.  The average mortgage interest rate for the quarter was 3.86%.  But by the end of April, it was 5.11%.  If the former is used, then housing affordability shows a modest gain in the first three months of the year, driven by a strong jump in incomes.  If the latter is used, then housing affordability shows a significant decline, despite the jump in incomes. Using the lower average quarterly rate (i.e. standard methodology), the NAHB/Wells Fargo Housing Opportunity Index (HOI) shows that 56.9% of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $90,000.  That would be an increase over the previous quarter’s 54.2%. If the same calculation is repeated using the higher, more current rate instead, the HOI for the first quarter of 2022 would be 48.7%.  That would be a decrease from the previous quarter’s 54.2% and the lowest affordability level recorded on the HOI since the beginning of the revised series in the first quarter of 2012. The HOI shows that the national median home price increased to a record $365,000 in the first quarter of 2022, up $5,000 from the previous quarter and a whopping $45,000 from a year earlier. Median family income in the U.S., meanwhile, rose from $79,900 in 2021 to $90,000 in 2022. The top five most affordable major housing markets in the first quarter of 2022 were: Lansing-East Lansing, Mich. Indianapolis-Carmel-Anderson, Ind. Scranton–Wilkes-Barre, Pa. Rochester, N.Y. Dayton-Kettering, Ohio The top five least affordable major housing markets—all located in California: Los Angeles-Long Beach-Glendale Anaheim-Santa Ana-Irvine San Francisco-San Mateo-Redwood City San Diego-Chula Vista-Carlsbad Stockton Meanwhile, Wheeling, W.Va.-Ohio., was rated the nation’s most affordable small market, with 97.3% of homes sold in the first quarter being affordable to families earning the median income of $75,400. The top five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, Calif., where 9.2% of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $90,100. Visit nahb.org/hoi  for tables, historic data and details. Related ‹ Mortgage Activity Up in ARMsBuilding Materials Prices Move Higher, Up 19% Year-over-Year ›Tags: housing affordability, housing economics

Latest Interest Rates Signal Significant Declines in Affordability2022-05-12T10:18:32-05:00

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