The third quarter Lifestory Research survey of home shopper confidence reveals a continuation in the decline in confidence. The most recent quarterly results revealed that 62% of home shoppers think now is a good to excellent time to purchase a home, a decline of 2.5 points from Q2 and a 4.0 point decline since Q1. It appears that the same factors leading to earlier declines in confidence remain in place for the most recent quarter as well. That is, concerns with rising home prices, rising mortgage rates, and an unsteady economy all contribute to concerns of home shoppers.

In regards to home prices, home shoppers expressed concern that prices will continue to rise with 54.6% of shoppers sharing this opinion. This is a slight increase from the prior period of Q2 (53.4%). Among those that believe that home prices will continue to increase, 51% of shoppers expressed the belief that prices will increase more than 7% over the course of the next 12 months.

The survey also found changes in expectations concerning mortgage interest rates. The survey identified that 71.3% of home shoppers believe that mortgage rates will rise in the next 12 months (65.6 in Q1 vs 70.7% in Q2). In addition, close to a third (36%) of shoppers have concerns that their mortgage application would potentially be turned down.

Finally, among the concerns expressed by shoppers, the greatest concern remains firmly focused on the health of the economy. Among those shopping for a new home, the majority (55.4%) rate the economy as being poor to fair, and only a small portion see the economy as very good to excellent (16.7%). Among those shopping for a home, the survey has found a consistent concern with the current health of the economy over the course of 2015 (Q1 50.7%, Q2 57.2%, Q3 55.4%). Moreover, when asked about the economy in 12 months from now, there has been a decline in those who see things getting better (Q1 37.3%, Q2 33.8%, Q3 32.9%).

On the bright side, home shoppers believe that the value of their own home has increased in value. A total of 56.4% of shoppers reported that they believe their home is worth more today than 2 years ago, an increase from 52% in Q2. About a third of shoppers (36%) believe their home has increased up to 5% in value, about a third of shoppers (35%) believe their home has appreciated 6-10%, and the remaining shoppers (29%) are confident that their home has appreciated more than 10% in the last 2 years.

Conclusions

The results from this most recent survey of home shoppers demonstrates a faltering sense of confidence. The wavering confidence is concentrated on the continuing uncertainty of the economy, rising housing costs, and the pressures of potential increases in mortgage rates.

About the Survey

Unlike other national polls tracking consumer confidence, this line of research specifically surveys those that are actively shopping for a new home (as well as those that are not actively shopping for a home). By approaching consumers who are both actively shopping as well as those who are not, we will be able to track changes in consumer confidence based upon home shopping activity. Each wave of the research program surveys 1000 new home shoppers and 1000 people in the general population for a total sample size of 2000 adults. Data are weighted to produce a final sample that is representative of the general population of adults in the United States.