Homeowners are growing more optimistic about selling and buying a home as consumer confidence improves, while elevated home prices and lingering supply shortages are hampering renters’ outlook on buying, according the latest quarterly Housing Opportunities and Market Experience survey from the National Association of Realtors.
According to the survey, 69% of homeowners in the first quarter of 2017 said it is a good time to sell a home compared to 62% in the fourth quarter of 2016. Meanwhile, 80% believe it is a good time to purchase a property, up from 78% who said so last quarter.
The uptick in consumer confidence during the period was driven by respondents from the Midwest region and rural areas, a trend the NAR attributes to the post-election optimism surge. Against a backdrop of high home prices, dwindling inventory and rising mortgage rates, renters are less optimistic about buying a home.
Consumer confidence is on the rise, reaching its highest level in 15 years last month, and is typically considered to be a leading indicator of future homebuying and remodeling activity.
Homebuilders, too, are positive. The National Association of Home Builders/Wells Fargo Housing Market Index rose in March to its highest level in more than a decade after declining since December, when the index also reached a new high. The NAHB attributed February’s jump in the index to President Donald Trump’s recent executive actions to scale back regulations, including the request to revise or repeal the Waters of the U.S. land-use measure.
Headwinds including home-price growth, mortgage rate increases, lot availability and labor costs are already challenging this optimism among pros and consumers.
Home prices continued to rise in January and were up 6.9% year-over-year, according to the latest CoreLogic Home Price Index. A slowdown in price growth in some markets as more inventory comes online there and price pressure loosens could be the catalyst for a tapering in home-price increases nationally.
An increase in new construction has been billed as a critical part of the solution to the current inventory shortage. Single-family starts were up 6.2% year-over-year in January, according to the latest data from the Commerce Department, while building permit authorizations were 8.2% ahead of the year-ago period for the month.