Freddie Mac research reveals that despite rising rents, the majority of renters are not motivated to purchase a home and positive perceptions about renting are increasing. According to the U.S. Census Bureau, more than one-third of U.S. households are renting homes, and renters make up all net household growth over the last several years. This year, rents are expected to rise 3.4 percent above inflation, a slight decrease from last years’ number of 3.6.
Only 6 percent of renters who have lived in their home longer than two years have experienced a decrease in their rent amount, while 38 percent of renters experienced an increase in their rent amount in the last two years. Of the renters who experienced an increase, 70 percent noted that they want to buy a home but cannot afford it right now. Fifty-one percent said that they would have to put off their plans to buy a home for now. Another 44 percent said that they would like to buy and are looking for a home to purchase.
Builder confidence for consumers looking to purchase newly built, single-family homes dropped two points to a level of 54 in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Although confidence fell two points this month, this is an increase of nine points from May 2014. According to the index, the component that measured future demand rose one point to 64, the highest level so far this year. Buyer traffic dropped by one point to 39, and the component measuring current sales dropped two points to 59 but remained well above the tipping point of 50.