People looking to buy a home will tell you: the market is tight. In most places, prospective buyers are seeing all too few properties to chose from and even fewer that meet their budget.
And those who plan to buy within the next year don’t expect their choices to grow anytime soon.
That’s a finding in the Housing Trends Report for the third quarter of 2018, released by the National Association of Home Builders. The results are based on data from national polls of adults across the country. Only 19% of prospective buyers expect their home search to get easier in months ahead, while 71% think it will get harder or stay the same.
In the NAHB survey, many prospective home buyers were already seeing static or shrinking inventory in late 2018. The majority (61%) said that during the third quarter of 2018 they saw the same number or fewer homes for sale than they had during the three months before.
Affordability squeezes buyers’ choices even further. For nearly 8 out of 10 prospective buyers in the survey, fewer than half of the houses they saw on the market were priced within reach. That finding held for all age groups surveyed.
In fact, for those who had been looking at least three months, the top reason why they hadn’t bought yet was not finding a home they could afford (49%), followed by not finding a home with desired features (40%).
Of prospective buyers, 44% said they’d prefer an existing home to a newly built one. But almost as many (38%) said they have no preference one way or the other, while 18% prefer new construction. That means either a newly built or existing home would suit most shoppers. An uptick in the supply of either type would improve the picture for most buyers — as long as the new supply comes in at an affordable price.
So what happens if people hoping to buy don’t find what they want in the next few months?
The majority of those polled (61%) said they’d keep looking for the right home in their preferred location. Some said they’d expand the area of their search, accept a smaller or older home than preferred, or would pay more than they originally intended. Just 18% said they would give up and try again the following year or even further in the future.
Among those already actively shopping for a home, the majority had been looking for three months or more. It’s taking time, but they are sticking with it.
And it’s not equally tough for everyone everywhere. More than a quarter of respondents did see an increase in homes on the market during the third quarter 2018. Some even see brighter times ahead, with 19% expecting the search to get easier in the coming months.