• The share of owners (68 percent) who believe now is a good time to buy has remained strong and steady over the past year, but renter confidence (57 percent) has taken an 11 percentage point dip from 2015.
  • NAR Chief Economist Lawrence Yun says "declining affordability" is the culprit behind the crumbling confidence of renters, but he remains hopeful that job growth and "any economic stimulus" from Trump will help turn things around.

As mortgage rates rise, are consumers feeling as good about buying a home as they were earlier this year? The latest quarterly Housing Opportunities and Market Experience (HOME) Survey from the National Association of Realtors (NAR) holds some clues.

Although slightly more consumers believe strongly that now is a good time to buy a home (up to 45 percent in the fourth quarter of 2016 from 43 percent in the third quarter), slightly fewer consumers believe that it’s a good time to sell a home (down to 70 percent in Q4 from 71 percent in Q3).

NAR HOME Survey Q4 2016

Waning enthusiasm won’t stop growth

Despite the dip in buyer enthusiasm and renter confidence, NAR is still projecting modest gains in existing-home sales over the upcoming year.

This year’s existing-home sales are expected to close out at 5.42 million — 3.3 percentage points higher than 2015 and the best year since 2006’s 6.47 million. Lastly, existing-home sales are forecasted to rise 2.2 percentage points to approximately 5.52 million.

Furthermore, national median existing-home sales prices are expected to trend upward and climb 4 percentage points in 2017. Mortgage rates are likely to reach 4.6 percent by next December.

“Although the economy is expected to continue to expand with around 2 million net new job creations, existing home sales are expected to see little expansion next year because of affordability tensions from rising mortgage rates and prices continuing to outpace income growth,” said NAR Chief Economist Lawrence Yun in a press release.

In spite of affordability and inventory woes, Yun says he’s hopeful that continued job growth and any economic stimulus plans from the Trump presidency, paired with more millennials reaching prime homebuying age, will be enough to bring the housing market out of the slump it’s been fighting all year.

NAR HOME Survey Q4 2016 (2)

Confidence in economy stays strong

Sturdy job gains and decreasing unemployment rates have translated into stronger confidence in the economy. Fifty-four percent of households who believe the economy has improved — the highest confidence since the survey’s debut in 2015, and five percentage points higher than Q3.

When it comes to finances, 59.8 percent of respondents believe their personal financial health will be better in six months. This represents a small gain in confidence from September (58.6) and is in line with last year’s Q4 sentiments (59.6).

Respondents’ happy feelings about the economy apparently spilled over into their thoughts about selling as well. Sixty-two percent of owners believe it’s a good time to sell, which is essentially unchanged from the previous quarter’s sentiments.

On the other hand, buyers — especially those in the West — don’t think it’s the best time to buy, due in part to the expectation that home prices will stay steady or rise in their community over the next six months.

Respondents living in suburban areas, renters and West coast-dwellers are most likely to believe home prices will climb in the new year.

The survey took place in October through early December 2016. A sample of U.S. households was surveyed via random-digit dial, including half via cell phones and the other half via land lines. The survey was conducted by an established survey research firm, TechnoMetrica Market Intelligence.

Each month, approximately 900 qualified households responded to the survey. A total of 2,776 household responses are represented in this report.

Email Marian McPherson

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