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Elevated home prices, soaring mortgage rates and limited inventory are the three major hurdles jeopardizing home buyers’ plans this year. Many would-be buyers have decided to wait out the market for conditions to improve, a trend particularly noticeable among certain races and ethnicities, according to two new research reports from the National Association of REALTORS®.
The studies, which were conducted in partnership with Morning Consult, show that of prospective buyers who say they are waiting for home prices to decline before purchasing:
- 27% are Asian.
- 24% are Hispanic.
- 20% are Black.
- 15% are White.
Survey respondents across racial demographics also say they’re waiting to buy a home until mortgage rates decline and more homes that fit their budget become available, the NAR studies show. “Home buyers face the most difficult affordability conditions in nearly 40 years due to limited inventory and rising mortgage interest rates,” says Jessica Lautz, NAR’s deputy chief economist and vice president of research. “The impact is exacerbated among first-time buyers, who are more likely to be from underrepresented segments of the population.”
The studies are the 2023 Experiences & Barriers of Prospective Home Buyers Across Races/Ethnicities and the 2023 Experiences & Barriers of Prospective Home Buyers: Member Study.
Down Payment Hurdles Persist
Current housing costs and credit card debt are limiting would-be buyers’ ability to save for a down payment, the reports show. Awareness about down payment assistance programs remains low: A third of prospective buyers across racial and ethnic lines say they were unaware of such programs.
“Down payment assistance programs often fly under the radar for potential home buyers,” Lautz says. “Using programs, like FHA, VA or USDA loans, can make homeownership more attainable. Experts, such as agents who are REALTORS®, can educate potential buyers about these programs. Doing so will bring in more first-time buyers and narrow the racial homeownership gap.”
Realtor.com® offers a down payment assistance search tool, listing more than 2,000 programs.
Discrimination Still a Problem
An additional hurdle to homeownership: About one in six prospective buyers across races and ethnicities report facing discrimination, NAR’s reports show. More than half of Black (63%), Asian (60%) and Hispanic (52%) buyers who report facing discrimination say they believe they were targeted because of their race or ethnicity. The bulk of their complaints are about steering or requirements for qualifying for a loan.
NAR offers several resources and training to its members that aim to prevent discrimination in a real estate transaction, including:
- Fairhaven, an interactive training simulation based on real fair housing cases.
- “Bias Override: Overcoming Barriers to Fair Housing,” an implicit bias training course with tips on how to overcome biased thinking.
- At Home With Diversity, a certification course centered on serving diverse consumers.
- A fair housing toolkit to help state and local associations use grants to further fair housing efforts in their communities.
