Home prices continued to rise in April, with no signs of slowing down anytime soon. No real surprise, then, that a new Gallup survey finds most Americans anticipating that price climb to continue on its upward trajectory. But is that ongoing increase deterring those surveyed from shopping for a new home if they’re ready to do so?
For a majority of respondents, that answer is no.
Gallup's annual Economy and Personal Finance poll, conducted April 2-11, found that most Americans surveyed were aware of this trend and expected it to continue. When asked, “Over the next year, do you think that the average price of houses in your area will increase, stay the same, or decrease,” 64 percent responded that they anticipated local home prices would continue increasing. That percentage is up nine percentage points over the past two years and now marks the highest percentage Gallup has measured since 2005.
Twenty-six percent of those surveyed said they expected home prices to stay the same, and only 10 percent expected prices to go down.
Sixty-five percent of those surveyed also said they believed now was a good time to purchase a home. This is down from 74 percent in 2014 but still well above the lows near 50 percent that were recorded between 2006 - 2008. Since Gallup began asking that question in 1978, the percentage of respondents saying it was a good time to purchase a house has never dropped below 50 percent. “To some degree, Americans may answer the question in terms of both housing market conditions and their views about buying a house as a long-term investment,” Gallup notes.
In the 2005 survey, 70 percent of Americans said they expected home prices to rise over the following year. By April 2007, that percentage had dropped all the way to 52 percent. By 2008, expectations had flipped considerably, with Gallup reporting that 38 percent of those surveyed expected prices to decrease, as compared to 29 percent who expected an increase. By 2013, a majority (51 percent) once again tipped toward believing prices would increase, and that number has been on the rise ever since.
The sentiment that prices will increase is strongest in the West at 79 percent—up 15 percentage points over the 2016 survey. The South recorded the next highest response, with 64 percent anticipating price increases (although this represented only a 3 percentage point increase over Southern sentiment from the 2016 survey). Next was the East (58 percent, up 10 percentage points over 2016) and the Midwest (56 percent, up 11 percentage points).
“High demand and limited supply of homes are putting upward pressure on home prices, leading many real estate experts to urge prospective buyers to get into the market now, before rising prices and interest rates make homes too expensive to afford,” Gallup’s survey states. “Americans appear to be aware of housing market conditions, with their opinions of whether home prices will rise trending in the same direction as U.S. home prices. But they also may be aware that it is becoming more of a seller's market than a buyer's market. While they remain optimistic that it is a good time to purchase a home, they are less optimistic than they were four years ago, when houses were more affordable and interest rates were lower.”