Views of the US housing market reach new depths

Main points of the story

  • 21% say this is a good time to buy a home, lowest on Gallup’s trend
  • Prior to 2022, 50% or more consistently thought it was a good time to buy
  • Significantly fewer expect local housing prices to rise in the coming year

WASHINGTON, DC — Twenty-one percent of adults in the United States think it’s a good time to buy a home, down nine percentage points from last year’s low. The 2022 and 2023 readings are the only times less than half of Americans have seen the housing market as good for buyers in Gallup’s direction since 1978.

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The latest findings are from Gallup’s annual Poll of Economics and Personal Finance, which was conducted April 3-25. Seventy-eight percent say now is a bad time to buy a home.

Gallup first asked Americans about their perceptions of the housing market in 1978, when 53% thought it was the right time to buy a home. Thirteen years later, when the question was asked again, 67% supported this view. A record high of 81% was set in 2003, at a time of increasing homeownership rates and home prices.

As prices continued to rise in subsequent years, creating a housing “bubble,” Americans became less optimistic about housing market conditions, with between 52% and 58% saying it was a good time to buy from 2006 through 2008.

After the housing bubble burst in the first half of 2007, home prices trended lower in the following two years, and generally stabilized through 2011. With lower prices and lower interest rates in general, general optimism about homebuying recovered, rising to 71% in 2009 and held in the low 60s or 70s until 2017.

By 2020, in the early stages of the coronavirus pandemic when economic activity was severely limited in many parts of the country, 50%, a record low at the time, thought it was a good time to buy a home.

In the past two years, as home prices have risen and the Federal Reserve raised interest rates to try to tame inflation, homes have become less affordable for many Americans, and views of the housing market have softened.

Views of the housing market are generally bleak and similar across all major subgroups, including by area, urbanization, home ownership status, income, education, and party identification. Subgroups in these categories range from 18% to 24% believing it is a good time to buy a home.

Few expect local home prices to go up

In addition to gauging Americans’ perceptions of the housing market in general, Gallup monitors public expectations for home prices in their area. In 2021, 71% expected local home prices to rise over the next year, the highest percentage that held that view in a Gallup trend dating back to 2005. Last year, a similar 70% expected home prices to rise. Americans’ predictions for 2021 and 2022 were generally accurate, as house prices reached record levels in the last quarter of 2022, when the median home sales price in the United States was $479,500.

Now, with home prices beginning to fall in many areas of the country, to an average of $436,800 in the first quarter of 2023, fewer Americans expect home values ​​to rise in their area in the coming year. Currently, 56% hold this view, while 25% believe that prices will remain the same and 19% believe they will decrease.

Despite the declines this year, current projections for home prices are still relatively high. In 2020, 40% thought home prices would rise, and from 2009 through 2012, after the housing bubble burst, it increased between 22% and 34%.

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Rural Midwesterners and villagers are unlikely to expect home values ​​to increase

Americans who live in different parts of the country differ in how much they think local home prices will rise in the next year. Regionally, Midwestern residents are less likely than those in other parts of the country to predict that home prices in their area will rise over the next year. While 45% of Midwest residents expect prices to rise, 55% of West residents, 61% of Southern residents and 62% of Eastern residents will.

Also, those who live in cities or rural areas (45%) are much less inclined than residents of cities (64%) or suburbs (57%) to predict increases in local housing prices.

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Midwest, Western, and city/country residents show the largest declines since 2022 in the percentage of believing local home values ​​will increase, each decreasing by 21 points or more. The southern, city and suburban populations showed a slight decrease, while there was no change among the eastern populations.

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More Americans now than ever believe it is a good time to buy a home. The past two years are the only times Gallup has found that less than half of Americans support buying a home in the mainstream housing market. These bleak assessments of home buying are fairly uniform across most subgroups of Americans.

Americans’ pessimism about home buying likely reflects rising prices and higher interest rates conspiring to make mortgage payments less expensive. These situations may keep many potential homebuyers out of the market.

At the same time, Americans still consider real estate to be a better long-term investment over stocks, gold, and other options, although fewer real estate earn this distinction than in recent years.

Although 19% of Americans expect home prices to fall in the next year—much less than the 38% and 34% who did in 2008 and 2009, respectively—they are much less likely than they have been in the past two years to anticipate prices. Go up. Any stabilizing or downward pressure on home prices could make homes more affordable for Americans, especially if interest rates stabilize or fall in the coming years.

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