Affordability Is Main Obstacle for Home Buyers, NAR Studies Find

Whether it's high prices, high mortgage rates, or lack of supply, it all comes down to affordability

Aerial view of house roofs in suburban neighborhood

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Several factors, such as high prices and mortgage rates, and lack of supply, are impacting the affordability of homes in the U.S. for many prospective buyers, making affordability the top reason they aren't buying, according to the latest Experiences & Barriers of Prospective Home Buyers: Members Study released by the National Association of Realtors (NAR).

Key Takeaways

  • The top three reasons realtors say consumers are not purchasing a home boil down to affordability, including lack of inventory, high prices, and high mortgage rates.
  • Only 23% of realtors say their buyers have applied for down payment assistance programs.
  • More than half of Black, Asian, and Hispanic buyers say they experienced discrimination.

“Home buyers face the most difficult affordability conditions in nearly 40 years due to limited inventory and rising mortgage interest rates,” said Jessica Lautz, NAR’s deputy chief economist and vice president of research, in a statement. “The impact is exacerbated among first-time buyers who are more likely to be from underrepresented segments of the population."

About 77% of prospective home buyers have applied for and been approved for loans, and only 6% of buyers apply for but are denied home loans, likely due to low credit scores and insufficient down payments, NAR studies showed.

However, saving enough money for a down payment can be a struggle, with 53% of realtors citing it as an obstacle. Respondents cite rent/mortgage payments and credit card payments as barriers to saving. 

Although there are down payment assistance programs, many people are unaware of them, with only 23% of realtors saying that their buyers have applied for down payment assistance programs.

Among those who were aware of assistance programs, 30% could not qualify because their income was too high. According to consumers, the top reason for not applying for these programs is a lack of awareness.

Black, Asian, and Hispanic Home Buyers Face Additional Challenges

Black, Asian, and Hispanic homebuyers also cited affordability as the main reason they hesitate to buy. Still, the people in these groups face additional discrimination challenges, according to the Experiences and Barriers of Prospective Homebuyers Across Races/Ethnicities study, also by the NAR.

More than half of Black, Asian, and Hispanic buyers reported discrimination due to race or ethnicity. This most often took the form of being steered toward or away from specific neighborhoods or stricter requirements, according to the report.

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  2. National Association of Realtors. “Elevated Home Prices and Mortgage Rates, Limited Inventory Are Homebuying Barriers, According to Realtors and Prospective Home Buyers Across Races and Ethnicities.”

  3. National Association of Realtors. “Experiences & Barriers of Prospective Home Buyers: Member Study.”

  4. National Association of Realtors. “Experiences and Barriers of Prospective Home Buyers Across Races/Ethnicities.”

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