Prospective homebuyers are apparently less patient about market conditions than six months ago, with a significant percentage no longer willing to wait for prices or interest rates to decrease, a Bank of America study found.
Only 62% of likely purchasers surveyed in October were waiting to act in expectations of prices or rates to fall, down from 85% in April.
A portion of those results seemingly contradict the Fannie Mae Home Purchase Sentiment Index October survey findings that a record percentage said it was a bad time to buy a home. However, the HPSI also did point to a more optimistic market, rising to 64.9 from the record low of 56.7 one year earlier.
Adding to the proof of waning patience was the finding that newly constructed home sales rose in September to 759,000 units from 679,000 in April..
"Hopeful homebuyers are eager to own and having seen the dynamic market of the past few years – they're realizing that it's challenging to time the market," said Matt Vernon, head of consumer lending at Bank of America. "They're not letting mortgage rates and home prices be the sole factors in their home buying decision and they're prioritizing financial preparedness."
When consumers were asked what defines financial success, more than half cited homeownership (more than one choice was possible).
Among current homeowners, 63% said that was one of their greatest personal achievements, even topping raising a family at 50%.
In today's environment, 35% of respondents said they give up on purchasing a newly built home in order to buy one, while one-third would drop their desire to live near family, 32% would cut out the need to be near public transportation and 31% would give up "historical charm."
Meanwhile, since Gen Zers are just beginning to build their families, only 15% said they would give up space, versus 40% of Baby Boomers, the cohort whose children are likely moving out.
On the other hand, 24% of Gen Z claim they would compromise on location, compared with 6% of Baby Boomers.
"Buyers are increasingly aware that delaying decisions may not ensure more favorable conditions, especially due to the scarcity of homes available in the market," said Vernon. "This scarcity discourages potential buyers from waiting for potential price or interest rate adjustments — they understand that the best time to buy a home is when you are financially and emotionally ready and can find a home that fits your budget and needs."
