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The National Association of Home Builders says low mortgage rates, a desire for more space, and the suburbs are the main reasons prospective buyers are now turning into active buyers.
Of the 15% of American adults considering a future home purchase in the final quarter of 2020, 56% have moved beyond planning and are actively trying to find one to buy, up from the comparable 43% share a year earlier. 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, 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 become engaged and are actively searching for a home. On the other hand, the shares remained essentially flat among Gen Z (42%) and 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 most notorious in the West (41% to 61%) and in the Northeast (49% to67%).
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 3 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 looking for 3+ months for a home to buy.
The National Association of Home Builders says low mortgage rates, a desire for more space, and the suburbs are the main reasons prospective buyers are now turning into active buyers.