Even if mortgage rates face multiyear lows, homebuilders and buyers show less interest in properties.
Only 12% of adults say they plan to purchase a home in 2020, according to the survey released by the National Association of Home Builders in the second quarter of 2019. The result is a 14% decline in 2018.
The housing market is still considered expensive. Consumers are not confident about the economy and their personal finances.
The prices of property are increasing fastest on the lower end of the market. From 63% last year, 58% were first-timers among the surveyed potential homebuyers. First-time buyers are believed to have less wiggle room when it comes to negotiation.
“The drop marks the third consecutive year-over-year decline in the share of adults thinking about buying a home, providing further evidence of a slowdown in the housing market, as potential buyers are held back by the lowest levels of affordability in a decade,” wrote Rose Quint, NAHB’s assistant vice president for survey research.
U.S. home construction is also slowing down. According to Redfin, a real estate brokerage, the supply of newly built homes for sale decreased by 1% in the second quarter. It is reported as the first annual drop in six years.
Meanwhile, prices for newly built homes have stabilized, coming from seven straight years of increases.
“The moderation we’re seeing in new-home prices was expected and follows right along with our observation late last year that builders were finally shifting their focus toward offering smaller, more affordable homes,” said Redfin chief economist Daryl Fairweather.
“While this change was a clear and long-needed response to homebuyer demand and tastes amid an affordability crisis and a softening market, it also means that builders are now focused on homes that are less profitable for them,” Fairweather added.
