Home Survey

Housing and economic perceptions remain steady in Q2 2018 HOME survey

The second quarter of the year showed little change in perceptions toward the housing market and U.S. economy, according to the latest Housing Opportunities and Market Experience survey from the National Association of Realtors.

Respondents were generally more likely to consider it a good time to sell, saying home prices have risen and will likely continue to rise in their neighborhood. A majority of respondents also considered it a good time to buy, although this share has dipped in recent years.

Three-quarters of respondents considered it a good time to sell a home, up from 74 percent in the previous quarter and 71 percent in the second quarter of 2017. Respondents were most likely to be pleased with selling conditions if they were earning a household income of more than $100,000 a year (85 percent), between the ages of 55 and 64 (82 percent), earning $50,000 to $100,000, or a current homeowner (both 81 percent).

Sixty-eight percent of respondents said home prices have increased in their communities in the past 12 months, up from 63 percent in the first quarter of 2018 and 60 percent in the second quarter of 2017. Eighttwo percent of those in the West said prices have gone up, along with 75 percent of top income earners and 73 percent of those between the ages of 35 and 44.

More people also expected home price growth to continue, with 55 percent saying home values are likely to climb in their neighborhood in the next six months. This was up from 53 percent in the previous quarter and 52 percent in the previous year.

Sixty-eight percent considered it a good time to buy a home, unchanged from the first quarter and down 3 percentage points from the previous year. Those who were most likely to consider it a good time to buy were ages 65 and older (81 percent), current homeowners (78 percent), ages 55 to 64 (77 percent), or top earners (76 percent).

Renters were more pessimistic, with a slight majority—51 percent—saying it was not a good time to buy a home. Respondents were also more likely to say it was not a good time to buy if they were living with someone but did not own a home or if they were 34 years old or younger, with 48 percent of each group saying it was not a good time to buy.

Lawrence Yun, chief economist at the National Association of Realtors, blamed inventory levels for the slowly ebbing enthusiasm for buying a home. He said he hopes the higher confidence among existing homeowners will convince more of them to sell, helping to alleviate the shortage of properties for sale.

"Inventory remains the driving force in real estate, affecting everything from rising prices to household formation," said Yun. "Improving supply conditions is critical to improving buyer optimism and helping to remove some of the barriers holding back potential first-time buyers."

Respondents were more confident in their ability to get a mortgage, with 49 percent saying they did not think it would be difficult to qualify for a home loan. This share leapt from 36 percent in the first quarter and 40 percent in the second quarter of 2017.

Those with higher incomes were more likely to think they would not much difficulty qualifying for a mortgage, with 78 percent of top earners and 62 percent of those earning $50,000 to $100,000 giving this response. Fifty-three percent of respondents from the Midwest also said they did not think it would be too difficult to qualify for a mortgage.

Seventy-one percent of those earning under $50,000 said they thought it would be difficult to qualify for a home loan. Sixty-four percent of those ages 65 or older and 62 percent of non-owners who lived with someone shared the same view.

"Healthy job creation and faster wage growth mean that homeownership is viewed as a more attainable goal that it was a year ago," said Yun.

Economic perceptions remained high, with 58 percent considering the U.S. economy to be improving. This was down 2 percentage points from the previous quarter, but a year-over-year improvement of 4 percentage points.

Respondents were most likely to believe the economy was improving if they were a top earner (69 percent), non-owner living with someone (65 percent), or living in a rural area (63 percent). Fifty-two percent of renters and low-income respondents said they did not think the economy was improving, along with 49 percent of respondents living in urban areas.

The National Association of Realtors' Personal Financial Outlook Index dropped slightly, from 63.8 in March to 62.1 in June. However, it was still above a reading of 57.2 in the second quarter of 2017. The index assesses respondents' expectations for their personal financial situation in the next six months, with zero indicating that all respondents expect the situation to worsen, 100 indicating that all expect it to get better, and 50 indicating that all expect it to be about the same.

Each survey includes an additional set of questions, which changes each quarter. The survey for the second quarter of 2018 asked respondents if they thought a high rate of homeownership strengthened communities and whether it would be easier or more difficult for future generations to own a home.

Sixty-seven percent of respondents said they thought homeownership strengthened their community a great deal, while 22 percent thought it led to a somewhat stronger community. Ten percent said they did not really affect the strength of the community. Homeowners, top earners, and older respondents were most likely to think that a high rate of homeownership strengthened a community a great deal.

"Homeowners are more likely to be involved and engaged in the issues facing their communities, since they tend to be more rooted in the area than renters," said Elizabeth Mendenhall, president of the National Association of Realtors. "This involvement—homeowners are more likely than renters to vote, volunteer their time at local charities, and support neighborhood upkeep—helps shape and strengthen our nation's communities, as well as drive the national economy."

A majority of respondents said they thought it will be more difficult for future generations to own a home. Thirty-seven percent said they thought it will be much harder, while 36 percent thought it will be somewhat harder. Thirteen percent thought there will be no difference, 8 percent expected that it will be somewhat easier, and 3 percent thought it will be much easier.

The HOME survey for the second quarter of 2018 was based on 2,703 telephone interviews with a random sample of U.S. households. Approximately 900 households were interviewed each month between April and June.