A recent survey found that most successful buyers aren’t put off by rate levels, but for those who’ve paused their search, high rates are a top concern.
Key points:
- In a survey of member agents, Bright MLS found that more than 68% had a buyer client who paused their home search.
- Those buyers were frustrated by multiple-offer situations, high prices and elevated interest rates.
- Sellers are generally happy with the prices they’re getting, but many are offering concessions.
The summer months are typically a prime season for home sales, but as prices continue to reach record highs and mortgage rates seem stuck near the 7% mark, buyer and seller activity has been low to average, agents in a recent Bright MLS survey reported.
The survey, which includes responses from more than 1,000 agents across Bright’s Mid-Atlantic region, provided a snapshot of real estate consumers and their motivations, as well as agent expectations of future market activity.
Fewer buyers are giving up …
The survey found that 68.4% of respondents had a buyer client who paused their home search because of market conditions.
While that figure is high, it’s down roughly 6 percentage points from the previous month, suggesting that more people are continuing their home search.
… but many buyers remain discouraged
While some would-be buyers are forging ahead, those who’ve paused their search cited frustration with the market and financial barriers.
More than half of respondents said their clients were frustrated by unsuccessful offers or competing with all-cash offers, and just under half said their buyers simply couldn’t find the right home. Even though inventory has improved since last year — reaching 3.7 months of housing stock in May, according to NAR’s latest data — that’s still below what is considered a balanced market.
Buyers’ top concerns, however, were pocketbook issues: Nearly 61% of agents had clients who stopped looking for a home because prices were too high, and 57% said elevated mortgage rates were a factor.
Buyers in the Mid-Atlantic aren’t the only ones feeling pessimistic about their homebuying prospects. Fannie Mae’s Home Purchase Sentiment Index — a national monthly snapshot of consumer attitudes — reached a historic low in May, with 86% of consumers saying now is a bad time to buy a home.
Mortgage rates a concern, but not necessarily a blocker
While high mortgage rates were a key issue for buyers who abandoned their search, those who succeeded in making a purchase generally were not deterred by current rate levels.
Nearly a quarter of the survey respondents said their buyers purchased with cash, making mortgage rates irrelevant, and half said their clients were going to buy now regardless of rates.
Just 3.5% of agents said their buyers were timing their home purchase around a specific mortgage rate.
Sellers happy with sale prices
High home prices have been tough on buyers, but the vast majority of agents surveyed — 86% — said their sellers got the price they were hoping for.
Agents reported that sellers were moving for a variety of reasons, but most commonly cited family reasons as the motivating factor.
More than a third of agents said their seller clients offered buyers a credit for repairs, while 27% had a seller who negotiated a rent back and 20% contributed to the buyer’s closing costs.
Market may be muted going forward
Agents who have been waiting for the market to accelerate may need to wait a little longer. Bright MLS found that about half of the agents surveyed expect levels of both buyer and seller activity to be “average” over the next three months.
In May, nearly 40% of agents expected buyer activity to be high in the coming months, but that figure dropped to roughly 32% in June.
Compared to the sell-side, however, buyers are buzzing: Only 9% of agents predict high levels of seller activity in the next three months.