Multiple years of uninterrupted job gains and hope that the best is yet to come in 2017 are igniting consumer confidence across the country, a new consumer survey from the National Association of Realtors shows.
The survey additionally found a growing disparity among renters who think it’s a good time to buy and homeowners who think it’s a good time to sell.
In NAR’s quarterly Housing Opportunities and Market Experience survey, respondents were asked about their confidence in the U.S. economy and various questions about their housing expectations.
In the first three months of 2017, the share of households believing the economy is improving soared to its highest share in the survey’s five-quarter history (62 percent), and is up from 54 percent last quarter and 48 percent in March 2016.
“Confidence levels generally rise after a presidential election as the nation hopes for the best. Even though this is a highly polarized country, most consumers have upbeat feelings about the economy right now,” NAR Chief Economist Lawrence Yun says. “Stronger business and consumer morale typically lead to even more hiring and spending, which in turn encourages more households to make big decisions like buying a home.”
Higher confidence in the economy is also translating to better feelings about household finances. The HOME survey’s monthly Personal Financial Outlook Index showing respondents’ confidence that their financial situation will be better in six months jumped to its highest reading in the survey, climbing to 62.6 in March from 59.8 in December 2016. A year ago, the index was 58.1.
Affordability and inventory challenges dimming renter optimism
On the cusp of the busy spring season, most households believe now is a good time to buy a home. However, confidence continues to trickle backwards among renters. Fifty-six percent of renters said now is a good time to buy, which is down both from last quarter (57 percent) and a year ago (62 percent). Eighty percent of homeowners (78 percent in December 2016; 82 percent in March 2016) think now is a good time to make a home purchase. Younger households are the least optimistic.
“Inventory conditions are even worse than a year ago, and home prices and mortgage rates are on an uphill climb,” says Yun. “These factors are giving many renter households a pause about it being a good time to buy, even as their job prospects improve and wages grow. Unless there’s a significant boost in supply levels this spring, these constraints will unfortunately slow or delay some prospective buyers’ pursuit of purchasing a home.”
More homeowners view selling favorably right now
One promising trend that could alleviate supply shortages is the notable bump in the share of respondents this quarter who believe now is a good time to sell a home. Sixty-nine percent of homeowners think now is a good time to sell, which is up from last quarter (62 percent) and a year ago (56 percent).
NAR President William E. Brown, a Realtor from Alamo, California, says homeowners looking to trade up or move down this spring could find themselves in a tricky spot without careful planning and a reliable expert on their side.
“Demand is outpacing supply in many parts of the country, which means homeowners will likely sell their home much quicker than the time it takes to buy another,” he says. “Before listing, it’s best to have a carefully crafted plan in place. In addition to assisting in the hunt for a new home, a Realtor is an invaluable negotiating partner in the common situation where a buyer’s new home purchase is contingent upon selling their property currently up for sale.”
Source: National Association of Realtors