Bidding Wars Are Top Reason Active Buyers Remain Unsuccessful
Nearly 70% of active buyers still searching for a home last quarter have spent up to three months on the hunt, with most blaming getting outbid. The National Association of Home Builders began tracking the reasons active buyers have remained unsuccessful since the beginning of 2018. Getting outbid when making an offer ranked number one for the first time, whereas housing affordability typically lives at the top. From the share of long-time active buyers, 33% blamed housing affordability and 40% blamed getting outbid. Last year, 44% of buyers struggled due to affordability and only 19% reported getting outbid.
When asked what they’ll do next if still unable to find a home in the next few months, 50% of active buyers searching for 3+ months will continue looking for the ‘right’ home in the same location and 38% will expand their search area, both about the same shares as a year earlier. The most significant changes between the final quarters of 2019 and 2020 come in the shares likely to give up until next year or later (16% to 28%), to buy a more expensive home (16% to 27%), and to accept a smaller/older home (19% to 28%).
Importantly, historical data show a steadily rising trend in the share of long-term searchers likely to quit looking for a home until next year or later, as the latest increase marks the fourth year-over-year rise in this metric.