Bidding Wars on Homes are Keeping Some Active Buyers from Being Able to Make the Purchase

The National Association of Home Builders (NAHB) Housing Trends Report (HTP) is reporting that of the 16% of American adults considering a future home purchase in Q1 of 2021, 64% have moved beyond planning and are actively trying to find one to buy. That is up from the comparable 49% share a year ago. This increase marks the fifth consecutive year-over-year gain in the share of prospective buyers who have become active buyers. Several factors are driving this trend, including fear of missing out on still relatively low mortgage rates, desire for more space due to COVID-19, and desire to move out to outlying suburbs. The HTP is also reporting that of those buyers who are actively engaged in the process of finding a home in Q1 2021, many have spent more than 3-months searching for their home and without success. So, what the hold up? Last year, the HTP reports, the reason was not being able to find an affordable home. This year the most common reason is that they are being out bid in the bidding war for the home. When the 3+ months of unsuccessful buyers were asked what their next move will be if they are still unable to find a home in the next few months, 50% said they will continue looking for the ‘right’ home in the same location — basically unchanged from last year. 42% said they would expand their search, and that is up from 34% a year ago. Others have indicated that they will put off the search for at least another year if not longer, which is an increase over last year and marks the fifth straight year in a row for this metric.