Americans trying to buy a home in 2021 are slowed down by escalating bids from other buyers and challenges finding homes they can afford, according to survey results from National Association of Home Builders's most recent Housing Trends Report.
"The value of homeownership has never been greater as evidenced by the increase in active buyers this year," said NAHB Chairman Chuck Fowke. "Home builders are eager to meet this demand, but are hamstrung by high lumber costs. Policymakers must seek out solutions to resolve the lumber price problem to help more families achieve the American Dream."
Soaring lumber prices that have tripled over the past 12 months have caused the price of an average new single-family home to increase by $35,872, according to an analysis by NAHB. Further adding to housing affordability challenges, building material prices have by and large been steadily rising since 2020.
Millennials are the most likely generation to have moved on from just planning a home purchase to actively searching for a home to buy: 73 percent of this generation's prospective buyers were already active buyers in the first quarter of 2021, up from 54 percent a year earlier. Several factors are driving this trend, including the fear of missing out on still relatively low mortgage rates, desire for more space due to COVID-19 and the desire to move out to outlying suburbs.
Geographically, larger shares of prospective buyers in every region are actively trying to find a home to buy compared to a year ago, but the increase is most notable in the Northeast (56 percent to 74 percent) and in the West (51 percent to 69 percent).
As the share of prospective buyers actively searching for a home continues to increase, the length of time spent searching continues to grow. In the first quarter of 2021, 64 percent of buyers actively engaged in the purchase process have spent three months or longer looking, compared to 56 percent a year earlier. This marks the ninth consecutive year-over-year gain in the share of active buyers looking for three-plus months for a home to buy.