Homebuyer Caution May Signal Future Flat Home Price Growth

A new report from independent research group Capital Economics finds that more Americans say now is a bad time to purchase a home.

High home prices were cited by nearly 25 percent of the report's survey respondents as the main reason why they do not currently want to buy a home; this marks the first time in 12 years home prices served as a major deterrent, HousingWire reports. The report states, “The good news is that [current] caution should in itself prevent a dangerous boom in house prices from developing. Based on past form, the rise in households saying it is a bad time to buy suggests house price growth will slow to zero over the next 18 months.”

This sentiment appears to be elevated in relation to real home prices and mortgage affordability, according to the update. And while stricter mortgage lending standards may be preventing some who think they can afford a house from buying one, other factors, including lingering memories of the housing crash, may be at play. “We suspect memories of the house price crash 10 years ago are also playing a role in the relatively fast build-up in concerns over high house prices,” the update stated.

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