No Standing Still: People In The Housing Market Making Moves

Nevin Barich

Nevin Barich

Feb 15, 2021 –

February 15, 2021

Recently, I came across an interesting realization: I am in daily conversations with different friends regarding the housing market.

In one conversation thread, we’re talking about homebuying. Two friends of mine are closing soon on their first homes and I’m sharing with them my previous experience. In another thread, we’re discussing refinancing due to the low mortgage rates. A friend of mine recently refinanced to a 30-year fixed rate loan at 2.8%, which convinced my wife and I to refinance (we got 2.625% for a 30-year fixed), and that in turn led to four other friends refinancing their homes (three were 30-year fixed and one was a 15-year fixed).

And in yet a third thread, a small group of us are talking about the sudden increase we’re seeing in “For Sale” signs on homes in our area. In my neighborhood, three have popped up in the past week alone!

If there’s one common theme about these conversation threads, it’s that the housing market is full of people not just considering a move, but also actually doing so. This theme is supported by a recent National Association of Home Builders (NAHB) survey, which found that of the 15% of American adults considering a future home purchase in the fourth quarter of 2020, 56% have moved beyond planning and are actively trying to find one to buy, up from 43% in the year-ago period. This increase marks the fourth consecutive year-over-year rise in the share of prospective buyers who have become active buyers. Several factors help explain the increase, according to the NAHB, including fear of missing out on low mortgage rates, a desire for more space due to COVID-19 and a desire to move out to outlying suburbs.

Between the fourth quarters of 2019 and 2020, significantly larger shares of millennials (46% to 65%) and Gen X’ers (43% to 57%) planning to buy a home have taken the next step and are actively searching for a home. On the other hand, the shares remained essentially flat among Gen Z (42%) and baby boomer (38%) prospective buyers.

Geographically, larger shares of prospective buyers in every region are actively trying to find a home to buy than a year ago, but the increase is largest in the West (41% to 61%) and in the Northeast (49% to 67%).

As the share of prospective buyers actively searching for a home continues to increase, the length of time spent searching continues to grow. In the fourth quarter of 2020, 69% of buyers actively engaged in the purchase process have spent three months or longer looking, compared to 60% a year earlier. This marks the eighth consecutive year-over-year gain in the share of active buyers taking three-plus months to look for a home to buy.

The housing market is full of movement right now. That means lots more to talk about on these daily conversation threads.

Nevin Barich is the Consumer Products Analyst for Industry Intelligence, which can help YOU better address your own industry challenges. To arm yourself with the latest market intelligence, contact ClientCare@IndustryIntel.com. Ask us about our interactive intelligence map and search bot on Microsoft Teams.

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