According to a recent survey, most successful buyers are not deterred by the level of interest rates. However, for those who have paused their search, high interest rates are a major concern.
Important points:
- In a survey of its member brokers, Bright MLS found that over 68% of clients had a buyer who paused their home search.
- These buyers were frustrated by the multiple offers situation, high prices and increased interest rates.
- Sellers are generally happy with the prices achieved, but many offer concessions.
Typically, the summer months are peak season for home sales, but with prices continuing to hit record highs and mortgage rates seemingly stuck at the 7 percent mark, buyer and seller activity is low to average, brokers reported in a recent Bright MLS survey.
The survey, which includes responses from more than 1,000 agents across Bright’s Mid-Atlantic region, provides an overview of homebuyers and their motivations, as well as agents’ expectations for future market activity.
Fewer and fewer buyers give up …
The survey found that 68.4% of respondents had a buyer client who paused their home search due to market conditions.
While this number is high, it is about 6 percentage points lower than the previous month, suggesting that more people are continuing to search for a home.
… but many buyers remain discouraged
While some potential buyers are continuing, those who have paused their search complain of frustration with the market and financial hurdles.
More than half of respondents said their clients were frustrated by unsuccessful offers or competition from cash offers, and just under half said their buyers simply couldn’t find the right home. While inventory has improved since last year—it was at 3.7 months in May, according to the latest data from NAR—it’s still below what would be considered a balanced market.
But buyers’ biggest concerns were their wallets: Nearly 61 percent of agents had clients who abandoned their home search because prices were too high, and 57 percent said rising mortgage rates were a factor.
Buyers in the Mid-Atlantic region aren’t the only ones feeling pessimistic about their home-buying prospects. Fannie Mae’s Home Purchase Sentiment Index – a monthly nationwide snapshot of consumer sentiment – hit an all-time low in May, with 86 percent of consumers saying now is a bad time to buy a home.
Mortgage interest rates are a problem, but not an obstacle
While high mortgage rates have been a reason for many buyers to abandon their search, those who have managed to make a purchase have generally not been deterred by current interest rates.
Nearly a quarter of survey respondents said their buyers paid cash and therefore mortgage interest rates were no longer a factor. And half said their customers would now buy regardless of interest rates.
Only 3.5% of agents said their buyers timed their home purchase to a specific mortgage rate.
Seller satisfied with sales prices
High property prices are putting pressure on buyers, but the vast majority of agents surveyed – 86% – said their sellers got the price they were hoping for.
Agents reported that sellers moved for a variety of reasons, but most commonly cited family reasons as the motive.
More than a third of agents reported that their clients who were sellers had offered buyers a credit for repairs, while 27% had a seller negotiate a leaseback and 20% contributed to the buyer’s closing costs.
The market could remain subdued in the future
Agents who have been waiting for the market to accelerate may have to wait a little longer. Bright MLS found that about half of agents surveyed expect “average” activity from both buyers and sellers over the next three months.
In May, nearly 40% of agents expected there to be high buyer activity in the coming months, but in June that number dropped to about 32%.
Compared to the seller side, however, there is great enthusiasm on the buyer side: only 9% of brokers predict high seller activity for the next three months.
