In a survey conducted by NAR, 57% of renters believe right now is an agreeable time to buy – a decrease from September’s 60% and last year’s 68%. Meanwhile, 78% of homeowners agree that now is a good time to buy a home.
NAR Chief Economist Lawrence Yum said the reduction in consumer confidence can be attributed to declining affordability.
"Rents and home prices outpacing incomes and scant supply in the affordable price range has been a prominent headwind for many prospective buyers this year," he said. "Making matters worse, the unwelcoming reality of higher mortgage rates since the election is likely further holding back confidence. Younger households, renters and those living in the costlier West region — where prices have soared in recent months — are the least optimistic about buying."
Nevertheless, 2016 is still expected to close with sales 3.3% higher than last year, reaching around 5.42 million. Sales next year are projected to grow by only 2%, or around 5.52 million. Mortgage rates are expected to reach 4.6% by the end of 2017, while the Federal Reserve is anticipated to increase the Fed funds rate to 1.25%.
The new year is quickly approaching, and expectations for existing-home sales are limited due to increasing mortgage rates and dwindling consumer confidence, according to a forecast update by the National Association of Realtors.