Photo: Robert Clark
Since the end of 2017, the number of American prospective homebuyers has steadily fallen, according to the latest Housing Trends Report (HTR) from the National Association of Home Builders (NAHB).
“Home price gains and rising interest rates are slowing down the housing market, particularly in high-cost areas and among first-time buyers who are more severely impacted by price increases,” NAHB chief economist Robert Dietz recently told Livabl.
Some 13 percent of American adults are planning to buy in the next year, and most (58 percent) of these prospective buyers would be first-time homeowners — mostly unchanged from previous quarters.
This was down from nearly 25 percent in the fourth quarter of 2017, and down from 14 percent last quarter. Since 2017, demand has steadily fallen 11 percentage points.
Millennials (19 percent) were the most likely generational group to buy in the next 12 months, followed by Gen X (13 percent).
Unsurprisingly, most of the share of Millennials planning a home purchase are first-time home buyers (75 percent), while 48 percent of would-be Gen X buyers are attempting home ownership for the first time.
More than 40 percent of buyers in each generation are already actively searching for a home.
“These results are not surprising, given that mobility rates decline significantly with age: according to the Census Bureau’s 2017 Current Population Survey, 18 percent of those under 40 years of age moved in the previous year, compared to 9 percent of those 40 to 49 years old,” reads the report.
Of those planning a purchase, nearly half are looking at existing homes, while only about 18 percent are looking at new construction. Across the generations, about 40 percent of prospective buyers report they are looking at existing homes first for purchase.
Just over 40 percent of Millennials prefer existing homes compared to 18 percent who favor new construction.
Most buyers think home searches will get harder or stay about the same in the next year, and most believe there are fewer (or about the same) number of homes for sale now that just three months ago.
Affordability continues to be an issue for Americans of all ages — nearly 80 percent of all buyers can afford fewer than half of all the homes available in their markets. And about 80 percent of Millennials and Gen Xers can afford can afford fewer than half of all the homes available in their markets.
The national homeownership rate rose half a percentage point from last year to 64.4 percent at the end of the third quarter of 2018 as Millennials returned to the for-sale housing market, where gains in home price appreciation are starting to slowing down.
The HTR is based on the results of a poll of over 20,000 prospective American homebuyers conducted between September 25 and October 8, 2018.