Buyers are feeling the pinch of rising mortgage rates and low inventory in their search for homes, according to a survey of active homebuyers. A quarter of them say they are experiencing buyer fatigue and are becoming discouraged.
Rates barely moved in the latest Bankrate.com national survey of large lenders -- from 4.72 percent a week ago to 4.71 percent this week for a 30-year fixed-rate mortgage. A year ago, the rate was 3.81 percent.
It's not just the rates; it's the inventory
But it's not just rising rates that concern buyers: Fewer homes for sale mean that prices could continue to rise as well. In the quarterly homebuyer survey by Redfin, more than half of respondents, 53 percent, said rising rates are their second-largest concern, after low inventory of homes for sale. Nearly two-thirds said rising interest rates during the third quarter harmed their ability to find a home. Active homebuyers were polled in 22 metro markets across the country.
The latest data available from National Association of Realtors show that there were 2.19 million existing homes available for sale at the end of the second quarter -- a 7.6 percent drop in inventory from a year earlier.
Why are people looking for homes?
In a press statement last month, Lawrence Yun, chief economist at the National Association of Realtors, said that, "Tight supply conditions look to be with us for the balance of the year in most of the country. Areas with tighter supplies generally are seeing the strongest price growth, including markets such as Sacramento, Atlanta, Las Vegas, Naples (Fla.), San Francisco and Los Angeles."
When asked in the Redfin survey why they were planning to buy a home this year, 37 percent of respondents in the third quarter said low interest rates were the reason, as opposed to 56 percent in the second quarter. For the first time, the survey also asked if rising home prices factored into the decision: 33 percent said it did. Thirty-eight percent attributed their decision to search for a home to a "life event."
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