A scarcity of affordable homes on the market and the highest interest rates in decades are the primary factors dissuading potential U.S. homebuyers, according to two real estate industry surveys released on Thursday.
One survey, conducted by the National Association of Realtors (NAR), focused on real estate agents and revealed that 34% of their clients who had not yet made a purchase identified a lack of affordable housing as the most significant obstacle to homeownership. Additionally, 18% mentioned that their clients were postponing buying until interest rates decreased.
A companion survey targeting prospective buyers, developed by NAR and conducted by research firm Morning Consult, affirmed these findings, highlighting high property prices and borrowing costs as the key deterrents to homebuying.
Interestingly, home prices themselves emerged as the primary concern for prospective Black, Hispanic, and Asian buyers, while white buyers expressed equal apprehension about mortgage rates.
The housing market’s sensitivity to the Federal Reserve’s actions to combat inflation and reduce demand through substantial interest rate hikes since March 2022 has been noteworthy. Many current homeowners who secured lower mortgage rates before the Fed’s rate increases have opted not to sell, exacerbating the shortage of available homes.
During the week ending September 8, the average contract rate on a 30-year fixed-rate mortgage reached 7.27%, according to the Mortgage Bankers Association, coming close to the highest rate recorded in over two decades, which occurred just last month.
The survey conducted by NAR also highlighted that repeat buyers were twice as likely to wait for home prices to decrease compared to first-time buyers. Moreover, individuals classified as Gen-X (born between 1965 and 1981) and Baby Boomers (born before 1965) indicated a higher inclination to wait for mortgage rates to decrease in comparison to younger buyers.