Housing Market Shift Sparks New Wave of Buyers

Fewer Americans are willing to wait to buy homes in the current environment of high prices and mortgage rates, Bank of America said Monday, with prospective buyers also saying they're prepared to compromise their expectations to buy a house.

Sixty-two percent of prospective homebuyers said this week they're waiting until mortgage rates and prices fall before buying a house. Six months ago, 85 percent of potential buyers told BofA surveyors they would wait.

There is some evidence that this has begun to happen. In September, sales of new single-family homes rose about 12 percent to 759,000 compared to the previous month—and were up nearly 34 percent from a year ago, according to the Census Bureau and the Department of Housing and Urban Development.

However, in October, sales fell by nearly 6 percent as home prices also dropped. But compared to the same time in 2022, new home sales were up by nearly 18 percent.

Benefits of Homeownership Are Clear

BofA analysts point out that a home as an asset is worth pursuing for those in the financial position to acquire one.

"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," Matt Vernon, head of consumer lending at Bank of America, said in a statement. "Even in the current interest rate environment, there are clear benefits to purchasing a home and beginning to build equity."

Newsweek reached out for comment to BofA via email Monday.

The rise in mortgage rates, which at one point hit a more than two-decade high of 8 percent in October, was fueled by the Federal Reserve's hiking of rates in response to soaring of inflation which pushed up the borrowing costs of homes, auto loans and business investment.

Over recent weeks, however, mortgage rates have come down from the record highs seen two months ago. The average 30-year fixed rate fell to 7.22 percent last week, the fifth time in a row that it has dropped, lender Freddie Mac said.

Gen Z Compromises on Location

BofA's analysis found that buyers are showing flexibility when looking into purchasing a house, with different age groups willing to forgo different things. Gen Z are more likely to compromise on location, for example, and closeness to their work than Baby Boomers.

"There's a clear desire for homeownership, but for some, it has become more challenging to achieve due to current market realities," Vernon said.

For 53 percent of those surveyed, owning a home was a top sign of financial success. Meanwhile, 63 percent said having a home is a greater personal achievement than raising a family or being in a committed relationship.

"Homeownership is a core pillar of success," Vernon added.