Home buyers may be taking a step back from the market, but there's good reason to believe it's a temporary break and not a long departure. A recent online poll by MSN asked prospective home buyers if they were more or less likely to buy a home because of interest rates hovering around 5%.
The question was framed as follows, with respondents asked to choose one answer:
"Do interest rates of 5% make you..."
- Less likely to buy a house
- More likely to buy a house
- No change to plans
- Don't know
The survey garnered 245,566 responses. Here's how the answers shook out:
The majority of respondents, about 60%, said that higher interest rates did not change their home buying plans.
3% of respondents said rising rates made them more likely to buy a home.
6% said they didn't know how higher rates would affect their home buying plans.
Some home buyers saw themselves sidelined by higher rates. 31% of respondents said that they will be less likely to buy a home now that rates are higher.
A lack of affordable home inventory has been a growing problem nationwide. Upward pressure on home prices, in tandem with rising rates, will make home ownership more difficult for some Americans.
Yet in a number of markets, home inventories are increasing while sales are tapering off. Some analysts have been quick to pounce on the news, suggesting that the market has reached a peak, and there's nowhere to go but down.
However, it may be too soon to call this a turning point. Buyers may also be affected by these influences:
- Election season
- Stock market turbulence
- Upcoming income tax filings/Tax Reform impact
- Inclement weather/seasonal changes
Reluctant buyers could simply be in risk-aversion mode, taking a "wait and see" attitude while multiple uncertainties play out. But buyers who are financially prepared shouldn't shun the opportunities in front of them today. Interest rates are likely to keep rising in the upcoming months, and affordable home inventory will remain in limited supply.
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Copywriter & Marketing Specialist