Consumers are getting more confident about the economy and their finances, and that could bode well for the real estate market, according to the National Association of REALTORS®’ latest Housing Opportunities and Market Experience survey.
Indeed, the share of households who say the economy is improving surged to its highest share in the survey’s five-quarter history, reaching 62 percent (up from 48 percent a year ago).
The majority of positive sentiment about the economy is coming from respondents living in the Midwest and rural areas, according to the survey. Last March, 49 percent of Midwesterners and 35 percent of Americans living in rural areas thought the economy was improving. Today, 67 percent of Midwesterns and 63 percent of rural residents report an improvement to the economy.
“Confidence levels generally rise after a presidential election as the nation hopes for the best,” says Lawrence Yun, NAR’s chief economist. “Even though it is a highly polarized country, consumers for the most part have upbeat feelings about the economy right now. 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. These positive developments would be especially good news for prospective homebuyers in the more affordable Midwest region.”
Households are also feeling more confident about their finances. Respondents in the HOME survey reported confidence that their financial outlook will improve over the next six months. Financial confidence is at the highest levels in the survey’s history (reaching 62.6 on the index in March, up from a 58.1 reading a year ago).
Renters, however, may not be as confident. Fifty-six percent of renters say now is a good time to buy, down from 62 percent a year ago. Younger households, renters, and Americans living in more pricey areas, like the western region, are the least optimistic about buying. Meanwhile, 80 percent of homeowners say now is a good time to buy a home.
“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.”
Source: “2017 Q1 HOME Survey,” National Association of REALTORS® (March 2017)