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Buyers are holding out hope in peak real estate season, but against the inventory squeeze, their confidence was shaken this spring, according to the National Association of REALTORS® (NAR).
The amount of buyers confident in their housing market prospects stalled at 68 percent, according to NAR’s Housing Opportunities and Market Experience (HOME) second quarter survey—identical to the first quarter’s share, also 68 percent. Their ability to break out has been cut down by severe shortages in supply, and compounded by rising prices.
“Inventory remains the driving force in real estate, affecting everything from rising prices to household formation,” says Lawrence Yun, chief economist at NAR. “Improving supply conditions is critical to improving buyer optimism and helping to remove some of the barriers holding back potential first-time buyers.”
Although buyer enthusiasm stagnated, homeowners had a more optimistic outlook: 75 percent were confident in listing, and the amount who “strongly agree” that it is prime selling time tracked up to 46 percent, from 42 percent in the first quarter.
“Hopefully this strong seller optimism will lead to an increase in inventory later on in the year,” Yun says.
At 55 percent, more buyers and sellers believe home prices will rise in the next six months, according to the survey. Fifty-eight percent—a slight slip—believe the economy is improving. The HOME Personal Financial Outlook Index, a gauge of whether or not Americans expect their finances to improve in the next six months, dipped to 62.1, from 63.8 percent last quarter, but is higher than it was in the second quarter of 2017, when it was 57.2.
“This is most likely a reflection of the current positive outlook on the direction of the economy,” says Yun. “Healthy job creation and faster wage growth mean that homeownership is viewed as a more attainable goal than it was a year ago.”
However, 73 percent of respondents to the survey (and, markedly, 74 percent of millennials) believe it will be more difficult for future generations to become homeowners; only 11 percent believe it will be easier. The doubt does not discount the fact that 67 percent of respondents believe homeownership is a community cornerstone.
“Homeowners are more likely to be involved and engaged in the issues facing their communities, since they tend to be more rooted in the area than renters,” says NAR President Elizabeth Mendenhall. “This involvement—homeowners are more likely than renters to vote, volunteer their time at local charities and support neighborhood upkeep—helps shape and strengthen our nation’s communities, as well as drive the national economy.”