Why Almost 90% Of American Consumers Think Now Is A Bad Time To Buy A Home

Why Almost 90% Of American Consumers Think Now Is A Bad Time To Buy A Home

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Why Almost 90% Of American Consumers Think Now Is A Bad Time To Buy A Home

Why Almost 90% Of American Consumers Think Now Is A Bad Time To Buy A Home

The monthly Home Purchase Sentiment Index reveals that American consumers are increasingly pessimistic about the real estate market. According to the study, 86% of respondents thought now was a bad time to buy a house.

This rate is up almost 7% from the previous month when 79% of respondents said it was a bad time to buy. Not only buyers but sellers are also disheartened by the housing market. The number of respondents who said now is a bad time to sell a house jumped from 64% in March to 67% in April.

It’s not hard to understand why Americans are feeling negative, but the number of respondents who don’t expect things to improve is also concerning. A full 42% of respondents said they expect home prices to continue rising and mortgage rates to stay the same. This data suggests many Americans may be giving up on homeownership.

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In a statement about the study results, Fannie Mae’s Chief Economist Doug Duncan elaborated, “Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market. Additionally, current sentiment reflects frustration with the overall lack of purchase affordability.”

The National Association of Realtors reports that the median price of a secondhand home in the U.S. in April was $407,600. A recent Bankrate analysis showed that prospective homebuyers would need an average annual income of roughly $110,000 to afford a $400,000 home — a salary requirement that has jumped 50% in the last four years. Numbers like that have understandably dented consumer sentiment about home buying.

However, there were some rays of hope in Fannie Mae’s assessment and survey results. The mortgage giant notes that inventory has increased in 90% of America’s real estate markets. More importantly, 84% of survey respondents noticed a lessening of the “lock-in effect,” which analysts believe has been keeping homes off the market and worsening the inventory crisis.

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It should be noted that much of the new inventory is concentrated in the Southeastern U.S. Major markets in Florida and Texas have seen many new homes as builders scramble to accommodate new residents. That’s leading to a softening of the market in some Sunbelt cities simultaneously as the number of new residents trailed off. Some of those markets could become even more affordable as a result.

However, America’s most challenged markets regarding high prices and low inventory are unlikely to see much relief. Home prices remain stubbornly high in major cities in the Northeast and on the Pacific coast. Ironically, those high prices account for some of the movement by Americans into the Sunbelt, but the exodus hasn’t lowered prices in markets like San Francisco, Los Angeles and New York.

Despite these challenges, Americans have not lost their desire to be homeowners. Millions would jump into the market if they could find the right deal. The difficulties of today’s housing market are likely at the root of their pessimistic outlook. If the inventory crisis continues to ease and interest rates decrease, consumer sentiment will likely improve.

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This article Why Almost 90% Of American Consumers Think Now Is A Bad Time To Buy A Home originally appeared on Benzinga.com

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