Veterans United homebuyer index reveals highest readiness levels in over 18 months
A new survey has revealed that more veterans and service members are feeling ready to enter the housing market, driven by improving sentiment about the economy and their personal financial outlook.
Veterans United Home Loans, a VA lender, launched a new index to gauge financial readiness and homebuying sentiment among veterans, service members, and civilians. The index, which has been tracked since early 2023, jumped to 67 in the third quarter, the highest reading yet.
“This growing confidence in the economy is translating directly into the housing market in communities across the country,” said Chris Birk, vice president of mortgage insight at Veterans United. “With inflation showing signs of easing and more consumers believing mortgage rates will stabilize or even decrease, we’re seeing a significant boost in homebuying readiness.”
The survey showed that veterans and service members are particularly optimistic, with 74% planning to buy a home within the next year, compared to 69% of civilians. This newfound optimism comes as financial confidence also improves.
The Personal Financial Outlook Score for Veterans and service members rose to 40, the highest reading yet, with nearly 65% expecting their financial situation to improve over the next year, up from 56% a year ago. Civilians, though still positive, are slightly less optimistic, with 70% expecting their personal finances to improve.
A key driver of the increase in homebuyer readiness is the growing confidence in the economy. The US Economic Outlook Score reached 102 in the third quarter. For the first time, more than half of prospective buyers surveyed expressed confidence that the economy would improve over the next year.
This optimism is also translating into more favorable views on mortgage rates. The percentage of veterans and service members who believe mortgage rates will be lower in the next 12 months rose by 10 percentage points quarter-over-quarter, reaching 35%.
Meanwhile, the percentage who think rates will rise fell to its lowest level since the index was launched. Civilian buyers are more cautious, with only 25% expecting rates to fall.
“Although high interest rates and home prices remain a concern among prospective homebuyers, there is growing optimism, especially among Veterans and service members, which could drive increasing demand in the months ahead,” Birk said in the report.
Despite the positive sentiment, challenges still exist for prospective homebuyers, particularly around high home prices and interest rates. However, the report showed some improvement in how buyers perceive these obstacles.
About 46% of veterans cited high interest rates as a barrier to homebuying, down from 52% a year earlier. Among civilians, the percentage citing rates as a concern dropped to 39%, down from 46% in 2023.
Read more: Top 10 housing markets for young veterans to buy homes
High home prices remain the top concern for all buyers, but with economic confidence on the rise and the potential for mortgage rate stability, there is hope that homebuying activity will increase in the coming months.
The report also indicated a shift in homebuying timelines. The percentage of veterans and service members planning to buy a home in the next 12 months increased from 67% a year ago to 74%. On the other hand, fewer civilians plan to buy within the next three years, with the percentage dropping from 75% last year to 69% in Q3 2024.
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