Nearly half of U.S. homebuyers have stopped looking for residential property due to elevated interest rates, according to a new survey published by Discover Home Loans, a division of Discover Financial Services (NYSE: DFS)
In a nationwide survey of 1,500 adults, 84% of respondents who were planning to buy a new home said interest rates affected their decision. Of those impacted, 46% indicated they are no longer looking, while 35% said they were less committed in their search and 30% have lowered their budget. For most in this group, rates would need to fall significantly – with two-thirds (66%) of respondents admitted they would seriously consider a home purchase after 30-year mortgage rates fall below 5%.
Interest rates are also impacting how homeowners approach refinancing options – only 9% of homeowners plan to use a cash-out refinance for their home improvement project, down from 24% in 2023. Furthermore, 49% of homeowner respondents stated they are reducing discretionary spending and 33% choosing to delay home renovation projects because of inflation. As for those who pursued home renovations, 47% of respondents complained their project was costing more than they expected and 30% stated they have reduced the size of their project.
“When the Fed does gain confidence that inflation is under control, rate decreases are likely to be modest and gradual,” said Rob Cook, vice president of marketing at Discover Home Loans. “In the meantime, the housing market may remain sluggish. Consumers should reset their expectations and budgets accordingly.”
Interesting how the Fed has chosen to kill some industries but not others.
So now it’s Fed’s that are killing the housing market and not real estate agents. Very interesting.