Gallup’s annual Economy and Personal Finance poll was conducted April 1–19, coinciding with the median sale price of U.S. homes reaching a record $428,000 and mortgage interest rates rising to their highest levels in over a decade.
The poll found that just 30 percent of respondents felt optimistic about the housing market, the lowest number since the poll was first conducted in 1978, compared to 69 percent who believe it is now a bad time to invest in a house.
Younger respondents between the ages of 18 and 34 and those between the ages of 35 and 54 were less enthusiastic about buying a house.
Gallup found that 25 percent of those between 18 and 34 years old were seriously looking to buy a house, compared to 42 percent in 2021.
Of those between 35 to 54 years old, only 28 percent thought it was a good time to buy a house in the recent poll, a major slip from the 52 percent in 2021.
It was found that only 35 percent of older respondents in the 55 and above bracket felt it was a good time to invest in housing, a significant drop from 2021, when 61 percent of respondents were in favor.
Seven in ten respondents said that they believe the average price of houses in their areas will increase, slightly down from the 71 percent who answered similarly in 2021.
Among respondents with an annual income greater than $100,000, only 27 percent said now is a good time to buy a house, compared to 55 percent in 2021.
Respondents in the Midwest who thought it was a good time to buy a house fell to 29 percent in 2022 compared to 60 percent in 2021, and respondents from the suburbs who thought it was a good time dipped to 27 percent in 2022 compared to 60 percent in 2021.
This comes amid inflation hitting a 40-year high, forcing the Federal Reserve to raise interest rates, which in turn, slowed down the housing sales market.
“Treasury yields eased slightly last week but remained close to 2018 highs, as financial markets await the news from the Federal Reserve on its latest plans for rate hikes and reducing its balance sheet holdings," said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“The 30-year fixed rate was 5.36 percent, up over two percentage points from a year ago,” he said. “The 127-basis-point jump in rates over the past two months has triggered a 49 percent drop in refinance activity. Purchase applications increased for conventional, FHA, and VA loans and were up 4 percent overall.
“This is potentially a good sign for the spring home buying season, which has seen a slow start thus far. The purchase market remains challenged by low levels of housing inventory and rapid home-price gains, as well as the affordability hit from higher mortgage rates that are forcing prospective buyers to factor in higher monthly payments,” Kan concluded.
The refinance share of mortgage activity decreased to 33.9 percent of total applications from 35 percent the previous week.
“The ARM share remained unchanged at around 9 percent, which is well below the 30 percent mark observed in the mid-2000s,” said Kan.
The adjustable-rate mortgage (ARM) share of activity remained unchanged at 9.3 percent of total applications according to MBA’s latest report.
Meanwhile, consumer prices rose 1.2 percent, due in part to the ongoing war in Ukraine, as anti-Russian sanctions and a reduced global supply of key exports due to Chinese lockdowns have helped drive prices higher.
The poll found that most respondents believe that housing prices will only get higher, with 70 percent predicting that average local housing prices will increase over the next year, and 18 percent thinking prices will stay the same, while 12 percent believe they will decrease.
Still, Gallup found that over the past eight years, 45 percent of Americans chose real estate as their best long-term investment, outweighing stocks (24 percent), gold (15 percent), savings accounts (9 percent), and bonds (4 percent).
No fewer than 30 percent of Americans since 2014 have favored real estate as their top long-term investment, with those numbers exceeding 40 percent for the first time in 2021.
Only lower-income Americans differ from the other major demographic groups and are divided about evenly between real estate, stocks, and gold.
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