Higher interest rates are pricing out many home buyers while also transforming remaining prospects into active buyers, according to the NAHB. Nearly 60% of prospective buyers had moved beyond the planning phase and become fully engaged in the buying process in the third quarter, up significantly from 49% in the second quarter. However, while many prospects are active buyers, the NAHB says 70% of active buyers in the third quarter reported having spent more than three months searching for a home.
Those buyers [spending three or more months searching] also have higher incomes and education levels than in previous quarters. The most common reason these long-term searchers cite for not having bought by now is they are getting outbid by other offers (54%). In second place is the inability to find an affordable home (39%), followed by not being able to find a home in their desired neighborhood (30%).
When asked what they are most likely to do next if still unable to find a home in the next few months, 50% of active buyers searching for 3+ months said they will continue looking for the ‘right’ home in the same location (up from 46% a quarter earlier), 35% will expand their search area (down from 38%), 33% will accept a smaller/older home (up from 30%), and 28% will buy a more expensive home (up from 26%).
Meanwhile, the share who plan to give up their home search until next year or later climbed to 28%, up from 25% in the second quarter of 2022. This share has increased or remained flat in each of the past five quarters.
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