More than two-thirds of Americans say now is a bad time to buy a house

In one of the most unsurprising poll results seen this year, when a house is on the agenda, a record majority of Americans have indicated they believe now is most definitely not a good time to buy a home.

Gallup’s annual Economy and Personal Finance poll found that just 30% of Americans currently believe now is a good time to buy, down more than 23 percentage points from a year ago. That so few would appear to feel this way is not unexpected, given the stunning increase in home prices over the last couple of years, coupled with the recent jump in mortgage rates.

What is more surprising is that this is the most bearish that Americans have felt about home buying since records began, Gallup said. It’s the first time that less than 50% of Americans have felt home buying is a good opportunity since Gallup first began posing the question annually to consumers in 1978.

The S&P CoreLogic Case-Shiller National Home Price Index shows that median home prices have risen 34% since the start of the COVID-19 pandemic. This increase has been fuelled by low mortgage rates, which hit a number of record lows in the first year of the pandemic. However in the last few months, rates have now shot up.

The result of rising prices and higher interest rates is that home affordability is approaching its worst level on records. The average monthly mortgage payment on a home is almost $2,000 more than it was prior to the pandemic, reports said recently. Adding to that, home inventory remains at historic low levels. Demand is still strong, especially from millennials, but these days buyers are holding off due to the high costs, with home sales declining for the past five months.

“All major subgroups of Americans are significantly less positive about the housing market now than they were a year ago,” Gallup said in its report.

The survey showed that many of those who were positive about the market just one year ago are the most disappointed, with the largest decline in sentiment being among residents in the Midwest, suburban residents and upper-income Americans.

In terms of ages, around a quarter of young adults aged 18 to 34 said now is a good time to buy a home, down from 42% last year. Just 28% of Americans in the 35 to 54 year age bracket said the housing market is favorable. Those aged older than this were the most positive, with 35% saying now is a good time to buy, down from 61% a year ago.

The upper end of the housing market is seeing stronger activity compared to more affordable homes, where supply is tighter.

What’s more, Gallup’s poll indicates that sentiment could yet get worse. Despite the rising mortgage rates, most Americans believe home prices will likely continue rising. Opinion among analysts is more varied, but most say the current double-digit gains will slow to an increase of just 4% to 6% this year. However, it’s notable that consumers have generally always been bullish about home prices, with the exception of the Great Recession and the subprime mortgage crisis that occurred from 2008 to 2012.

Perhaps the biggest surprise from Gallup’s poll is that while Americans are pessimistic about buying, they still feel real estate represents a good long-term investment. When asked about their preferred investment options, 45% chose real estate, while just 24% opted for stocks and 15% said gold. When Gallup first posed this question, real estate was less popular than gold, but has been ahead since 2014, once the market recovered from the subprime crisis.