National Association of Home Builders CEO Jim Tobin has expressed concern over declining construction sentiment and has called on the government to provide assistance to the struggling industry. As the fall buying season is in full swing, prospective homebuyers are facing affordability challenges due to mortgage rates nearing 8%. This has forced some adults to move back in with their parents to save money for a future home purchase.
A survey conducted by Realtor.com and Censuswide found that half of those planning to buy a home within the next year are potentially looking to their parents for financial assistance. In fact, nearly one-third of respondents said they have already moved in with their parents to save money, while another quarter said they would consider doing so. This trend highlights the increasing reliance on family support to overcome the rising costs of homeownership.
Realtor.com’s executive news editor, Clare Trapasso, explained that while it’s common for homebuyers to receive financial help from family members, the current situation has seen prospective buyers taking it a step further. The combination of climbing rents and inflation has limited the savings potential of homebuyers over the past few years, forcing them to seek out creative solutions to achieve homeownership.
Economic research analyst Hannah Jones from Realtor.com says that living with family can result in substantial savings, especially if individuals are not required to pay rent. In fact, one year of living with family can save buyers more than $20,000 in rent, assuming median rental rates. Although this may not be enough for a down payment on a median-priced home, it can help boost existing savings and bring buyers closer to their homeownership goals.
Jones also highlighted the challenges caused by high rent costs and elevated inflation, making it difficult for prospective buyers to save for a home purchase. Rent prices remain close to 25% higher than pre-pandemic levels, while home prices have increased by over 35% since the start of the pandemic. Additionally, mortgage rates have reached a multi-decade high in October, further increasing the monthly cost of financing a home purchase.
Moving in with family or friends has become a popular strategy for saving for a down payment. However, the monthly cost of homeownership remains a significant barrier for many potential buyers. Jones suggests that buyers can minimize the impact of high mortgage rates by saving for a larger down payment or considering lower-priced homes.
The current situation highlights the challenges faced by prospective homebuyers in today’s market. As construction sentiment declines, industry experts and leaders like Jim Tobin are calling on the government to provide support and assistance to ensure that the dream of homeownership remains attainable for all Americans.