AMANDA HORTON & PAMELA HORTON REAL ESTATE NEWSLETTER
In light of low inventory, we found this article of interest this month. Thanks for reading and as always, we are here to help so let us know how we may be of assistance!
Shopping for a home? It will take longer than you think
Source, CNBC February 13, 2018
Homes today are selling in about 40 days on average, almost two weeks faster than a year ago. But it is taking a lot longer for shoppers to find a home to buy.
Two-thirds of buyers are shopping for more than three months before signing a deal, according to a new survey from the National Association of Home Builders. Why so long? They can't find a home they can afford.
Forty-two percent of buyers surveyed said prices were out of reach for the homes they wanted. Home prices have been rising at a fast clip in the past year – faster than income growth and inflation. The primary reason is a lack of homes for sale, especially lower-priced homes.
"It's the inventory problem that we're having out there that is causing these long delays in pulling the trigger," said Rose Quint, assistant vice president for survey research at the NAHB. "It's lack of affordability, although the other problems are serious as well."
About a third of those surveyed said they couldn't find a home with features they wanted or in a neighborhood they wanted. Back to prices though, 27 percent said they kept getting outbid on their offers. Bidding wars are now the rule, not the exception, in most major U.S. markets.
The lack of supply should benefit the homebuilders, and it may be already. Mortgage applications to purchase a newly built home jumped 18 percent in January compared with a year ago, according to the Mortgage Bankers Association.
"This complements other positive news on U.S. job growth suggesting that economic fundamentals are strong," said Lynn Fisher, MBA vice president of research and economics, in a release. "Based on applications, we estimate that new home sales were running at a pace of 700,000 on a seasonally adjusted annual basis – the highest such estimate in our survey which began in 2013."
The jump in demand is sizable, but the number of new homes for sale is still below historical averages and far below the number needed to satisfy both new and pent-up demand. The largest generation, millennials, are now moving into their homebuying years in force, but clearly not finding what they can afford.
The NAHB is predicting a 5 percent increase in new home construction in 2018 compared with 2017. The market could absorb far more, not just in major metropolitan areas, but across the nation.
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