While a number of Americans – including many prospective first-time buyers – are hoping to make a home purchase in the near future, high prices are still preventing many people from being able to compete in the market.
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Home prices rose 4.7 percent in December when compared with the year prior, according to a new report from CoreLogic. While price appreciation moderated in the second half of 2018 – due to inventory shortages and affordability challenges – the outlook remains challenging for prospective buyers, especially those looking to purchase their first homes.
The National Association of Homebuyers (NAHB) released its quarterly report this week, which found that 75 percent to 78 percent of buyers across the millennial, Generation X and Baby Boomer demographics were able to afford fewer than half of the homes available in their markets.
Nearly 50 percent of people named the inability to find an affordable home as the main reason they hadn’t been successful in their house hunting efforts over the past three or more months. Meanwhile, prices in half of the top 10 major metropolitan areas are overvalued.
Perhaps it is no surprise, then, that a much smaller share of respondents – 13 percent– are planning to buy a home within the next 12 months. That compares with 24 percent during the same period last year. Millennials (22 percent) were more likely than any other age group to say they were planning a home purchase within the next year – and more than three quarters of prospective millennial buyers are first-time buyers.
For 2019, CoreLogic expects prices to grow by another 3.4 percent.
Buyers from all age groups are experiencing the fallout from a years-long inventory decline. More than 60 percent of buyers across all age groups reported seeing either fewer or the same number of available homes for sale when compared with three months ago.
Despite strength in the U.S. economy, the recovery in the housing market has remained a weak spot in the wake of the financial crisis. Softness has also persisted despite an optimistic outlook for U.S. consumers and a recent come down in mortgage rates.