The FINANCIAL — Americans remain positive about home buying, but are a bit less optimistic than they were in 2013 and 2014. Currently, 69% say it is a good time to buy a house, down from an average 74% during the prior two years, but similar to what Gallup measured from 2009-2012.
Americans are more positive about buying a house now than they were between 2006 (when home values stopped rising and interest rates increased) and 2008 (after the housing bubble burst). In those years, just over half endorsed home buying, according to Gallup.
The latest results are based on Gallup’s annual Economy and Personal Finance survey, conducted April 9-12. The slightly less positive views of home buying may have been influenced by lackluster home sales earlier this year, as many parts of the country experienced unusually cold weather. The newest data on home sales, released last week, show there was a surge in sales of existing homes in March.
Since 1978, Americans have generally been optimistic about the home-buying climate, with majorities saying it is a good time to buy even in times when the economy struggles, including after the housing bubble burst. Thus, the measure likely reflects the value Americans put on homeownership in addition to their views of the prevailing housing market. Although Americans’ perceptions of real estate as the best long-term investment sank considerably during the recent recession, prior to that it was the clear leader of four possible choices, and more recently, it has returned to the top spot.
Confidence that it is a good time to buy a home has dropped the most since 2013-2014 among Americans residing in the Western part of the country, with 64% now saying this, down from an average 75%. There were smaller drops among those living in the East and South, while views in the Midwest are steady if not up slightly.
Most Expect Local Home Prices to Rise
Even though Americans are a bit less positive about home buying in general, they expect home prices in their local areas to increase. Currently, 59% expect home prices to rise, 29% believe they will stay the same, and 11% expect prices to decrease. That is the highest percentage expecting an increase since 2006, when 60% did.
In recent years, Americans living in the West have been most likely to expect local home values to rise, with 76% predicting an increase this year. Those widespread expectations of higher prices may explain why fewer Westerners believe now is a good time to buy a home. Southern residents are the next-most optimistic about local home prices, with 61% expecting an increase, followed by those living in the Midwest (51%) and East (46%).
Americans remain generally positive about the housing market, although they are slightly less inclined right now to believe buying a home is a good idea than they were during the past two years. It is possible that Americans’ current expectations for local home values to rise — the highest in nearly a decade — are causing some to believe conditions favor sellers more than buyers, and that buyers may not be getting as good a value.
It is also unclear to what extent the recent news about surging U.S. home sales may cause Americans to become a bit more positive about home buying conditions. Mortgage interest rates remain low, and higher consumer confidence than in recent years works in favor of continued strong home sales, particularly if the slump in sales earlier this year was mainly because of unusual weather conditions.
But a stronger economy also has persuaded the Federal Reserve Board to consider raising interest rates this year. If higher interest rates make financing a home purchase more expensive, it could dampen the housing market in the coming year.