Inventory Challenges Continue to Frustrate Buyers

By Kelly Leighton | Feb. 8, 2022 | 2 min. read

Buyers’ expectations of inventory challenges getting easier in 2022 are not too optimistic.

According to the National Association of Home Builders, in the fourth quarter of 2021, only 24% of buyers said they believed finding a home would be easier in the future. Nearly two-thirds think the process will remain the same or become more challenging. The number of prospective buyers also dropped in the fourth quarter, from 17% in the second quarter to 16% in the third and 15% in the fourth. However, the interest of millennials and Generation Z of buying actually increased in the fourth quarter, rising from 16% to 19% for Generation Z and from 27% to 29% for millennials. Generation X saw a steep decline, dropping in interest from 18% to 12%, while boomers remained consistent at 5%. Expectedly, only 31% of buyers reported that they have noticed more homes for sale, down 10% year over year.

Buyers’ perceptions of affordability also dropped throughout 2021. More than three-quarters of buyers reported they could afford less than half of the homes in their markets, up 13% year over year. Across all generations, expectations of affordability fell, but Generation X especially saw a big increase, from 54% in the fourth quarter of 2020 to 80% a year later.

The pandemic impacted buyers’ demands for new homes, when 42% of buyers were looking for new homes (fourth quarter of 2020), but that number has dropped to 25% as of the last quarter of 2021, which is still an increase over pre-pandemic demand levels. Millennials were the generation most likely to be looking for new homes (28%).  However, the number of potential buyers fell throughout 2021, dropping from 61% in the second quarter to 52% in the fourth.

More than two-third of buyers (67%) said that they spent longer than three months looking for a home and 41% reported it was taking so long because they could not find an affordable property, while 39% said they couldn’t find a home with the features they wanted and 35% lost bidding wars. Yet, buyers remain hopeful, 49% said they would keep looking, while 26% said they would expand their budget.

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