A new report from the National Association of Realtors reveals that demand from buyers is strong with a revival in the third quarter of 2017 in the share of renters (62%) who believe now is a good time to become first time buyers.
Among current homeowners, those in the Midwest and South are most optimistic about buying now according to the NAR HOME survey.
“The housing market has been in a funk since early spring because of the ongoing scarcity of new and existing homes for sale," said NAR chief economist Lawrence Yun. "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."
The survey found that economic sentiment is increasing with 57% of respondents saying things are better than a year ago. In the second quarter 54% said that and a year ago just 48% believed things were improving.
"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," said 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."
Along with inventory challenges, many renters believe that saving for a mortgage downpayment is a barrier to becoming homeowners.
Just 15% of renters surveyed said they would buy in the next year even though 51% expect to pay higher rent.
"Even though the typical down 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," said 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."
More market update:
Sentiment among potential homebuyers appears to be increasing but the housing market remains restrained by tight inventory and financial concerns.