Challenges in Affordability of US Homes Reported by One-Third of Prospective Buyers
Insufficient availability of affordable homes and record-high interest rates are the primary factors deterring potential homebuyers in the United States, as indicated by two real estate industry surveys released on Thursday.
According to a survey conducted by the National Association of Realtors (NAR), 34% of agents reported that their clients who had not yet purchased a home cited a scarcity of affordable housing as the number one obstacle to homeownership. Additionally, 18% mentioned that their clients were waiting for interest rates to decrease.
A companion survey designed by NAR and administered by research firm Morning Consult revealed similar findings, with high prices and borrowing costs being the primary hindrances to purchasing a house.
Notably, home prices were the biggest concern among prospective Black, Hispanic, and Asian buyers, while mortgage rates were equally worrisome for white buyers.
The housing market has been particularly responsive to the Federal Reserve’s measures to control inflation and reduce demand through substantial interest rate hikes since March 2022. With the Fed’s rate hike cycle underway, many existing homeowners who secured lower mortgage rates have opted against selling their properties, thereby exacerbating the supply scarcity in the market.
During the week ending September 8th, the average contract rate on a 30-year fixed-rate mortgage climbed to 7.27%, according to the Mortgage Bankers Association, coming close to the highest rate recorded in over two decades last month.