A new survey from realtor.com shows that both buyers and sellers are concerned that a recession is coming, and if one does, 56% of prospective home shoppers could put their search on hold.
Also, as worries of a recession persist, realtor.com reports that home prices in August fell 1.8% month-over-month in August to $309,000.
“What it tells us is, fall came earlier than expected,” said Senior Economist George Ratiu of realtor.com, noting prices usually cool in tandem with the weather, starting to decline in the autumn.
Realtor.com also noted that the number of homes on the market fell in August, which is the first month of inventory declines over the past year.
"A lot of the homes on the market are too expensive, and a lot of buyers are taking a break," Ratiu said. Meanwhile, sellers are "concerned they might have missed the high-water market," so they want to wait out the current climate.
Additionally, the report added that affordable homes are purchased quickly and are in short supply, and realtor.com said buyers that are on a budget and don’t act quickly may not find what they’re looking for.
Information from the U.S. Census Bureau, the Department of Housing and Urban Development, and the National Association of Home Builders (NAHB) revealed that there is a mismatch between actual home prices and what buyers expect to pay.
According to the NAHB, the median-sales price of single-family homes at the start of 2018 was under $322,000. Around 73% of those homes were priced between $250,000 and $1 million. Just 3% were less than $150,000 and none for under $100,000.
However, the 2019 NAHB survey, “What Homebuyers Really Want,” shows that the average price buyers expect to pay is about $254,000. Less than half expect to pay $250,000 to $1 million. Also, 27% are looking to pay less than $150,000 and 12% want to pay less than $100,000.
“Factors such as the ongoing shortages of labor and lots, and escalating regulatory costs have made it difficult to impossible to produce a new home at these lower price ranges,” the report states. “This obviously is forcing a significant share of buyers into the market for existing homes only.