Optimism regarding homebuying and home-selling is down in the final quarter of 2017, according to the National Association of Realtors’ (NAR) fourth-quarter Housing Opportunities and Market Experience (HOME) survey.
The percentage of homeowners who believe now is a good time to sell a home decreased this quarter to 76 percent from last quarter’s 80 percent despite highly favorable sellers’ markets across the country, the survey found. Still, optimism about selling continues to be much higher than it was year ago (62 percent). As with previous quarters, households in the West remain most optimistic about home-selling and least optimistic about homebuying.
Looking ahead to the inventory conditions of 2018, NAR Chief Economist Lawrence Yun sees hope in the much larger share of homeowners now compared to a year ago that consider this a good time to sell.
“However, the decline in the latest quarter is worth monitoring,” says Yun. “Realtors say the lack of new home construction in their markets is giving many potential trade-up buyers hesitation about putting their home on the market out of fear they won’t find another property to buy. This indecisiveness only exacerbates tight inventory conditions and slows housing turnover.”
Renter confidence in homebuying drops in the fourth quarter
Renters are also feeling less optimistic about buying a home this quarter, down to 60 percent from 62 last quarter. Despite the dip, the number is still an increase from last year’s 57 percent.
Current homeowners are among the most optimistic about buying a home at 79 percent, down slightly from 80 percent last quarter. Households with incomes above $100,000 and those in the more affordable Midwest and South regions also report slightly more optimism overall.
Although recent months have seen steady job creation, record stock market gains and faster economic growth, consumers are facing doubt about the end of 2017 being a good time to buy a home.
“Too many prospective first-time buyers see few options within their budget and home prices that are rising much faster than their incomes,” Yun says. “Until we start seeing a steady increase in new and existing inventory, sales will fail to deliver on their full potential and many would-be first-time buyers will be forced to continue renting.”
Economic, financial optimism down in the fourth quarter
The HOME survey also found that households are less confident about the economy and their financial situation. Just 52 percent of households believe that the economy is improving, compared 57 percent in the third quarter this year and 54 percent in the final quarter of 2016. Economic optimism among those in rural and suburban areas surpassed those living in urban areas for the fourth consecutive quarter.
The decline in economic confidence also resulted in households feeling less optimistic about their financial circumstances. Confidence that responders’ financial situation will improve over the next six months is down, according to the HOME’s monthly Personal Financial Outlook Index. The index, which was at 59.8 a year ago, dropped from 62 in September to 59.1 in December.