Fewer prospective home buyers are willing to wait until home prices drop or interest rates come down to purchase a home, according to data from the Bank of America Homebuyer Insights Report.
Sixty-two percent of prospective buyers are willing to wait for positive changes in pricing and rates to purchase a home, down from 85% just six months ago. The waning patience is translating into increased activity: Sales of new single-family houses in September were 759,000, up from 679,000 in April 2023.
“When it comes down to it, if buying a home is your goal and within your budget, the best time to buy is when you’re ready financially and you can find a home that fits your needs,” says Matt Venon, head of consumer lending at Bank of America. “Even in the current interest rate environment, there are clear benefits to purchasing a home and beginning to build equity.”
According to the Homebuyer Insights Report, those surveyed would give up specific home features to increase their chances of finding a home in the year ahead. Gen Z individuals are less likely to give up space than baby boomers (15% versus 40%), while Gen Zers would sooner compromise on location than baby boomers (24% versus 6%). Would-be buyers are most likely to give up a brand-new home and living near family if it increases the chances of finding a home to purchase, according to Bank of America.
Bank of America estimates 80% of outstanding U.S. mortgages have an interest rate below 5%, giving homeowners an incentive to stay put with 30-year fixed mortgage rates tracking above 7%. Half of current homeowners say they would be prompted to sell if their dream home became available or if they found a more affordable area, even if it meant paying a higher interest rate for a new mortgage.
Other factors that would influence homeowners to move include: a job opportunity or job relocation (40%), nice neighborhood amenities (40%), the need for a larger home or more rooms (38%), a social community to be a part of (32%), a desire to be adventurous and move to a new area (28%), and a move to a home with rental potential (21%). Bank of America found that work-related reasons would inspire homeowners to sell in this market and is a major driver for out-of-state moves.
According to internal Bank of America data tracking 26 metropolitan statistical areas, Boston and Portland, Oregon, are more likely to see inward migration due to job changes, and Austin, Texas; San Antonio; Las Vegas; and Tampa, Florida, saw the biggest population inflow during the third quarter.
The Homebuyer Insights Report gathered responses from 500 homeowners and 500 renters between Sept. 25 and 28.
