News Stories Not the Driving Force Behind Home Buying

Nov 20, 2006, 00:00 ET from National Association of Home Builders

    WASHINGTON, Nov. 20 /PRNewswire/ -- The nation's prospective home
 buyers may derive some of their information on the housing market from the
 news media, but at the end of the day the things that matter far more when
 they are deciding whether to make a purchase include the price of the new
 home, mortgage interest rates and their housing needs, according to a new
 nationwide survey commissioned by NAHB.
     "While the majority of the households we polled indicated that they
 found the media a reliable source of information on the housing market,
 what they read in the newspaper, saw on television or heard on the radio
 was no substitute for actually going out and shopping the market," said
 Thomas Riehle, a partner in RT Strategies, which conducted the research for
 NAHB.
     "When people are actually thinking about buying a home, they are driven
 by the details of how it will impact their family budget and lifestyle and
 contribute to their long-term wealth, and that gives them a much closer
 perspective on the market than what can be conveyed in news coverage,"
 Riehle continued.
     When asked to rate the importance of several factors that might affect
 their decision to buy or not to buy a home, survey respondents put the
 home's price at the top of the list, with 80% citing its significance.
     That was followed by: the potential for the new home to appreciate in
 value, 71%; the prospect of selling their current home at a fair price,
 70%; the level of mortgage interest rates, 69%; and personal life changes,
 such as a new job or an addition to the family, 60%. On a list of eight
 items, news stories on real estate market conditions ranked second from the
 bottom, with 28% saying that it was an important factor behind their
 decision to buy.
     When further asked about the influence of the news media on their
 decisions of when to buy a home, only 19% of the respondents said it played
 an important role; 23% indicated that it had some importance on their
 decision; and 7% said it played a minor role. A full 48% said it had no
 influence whatsoever.
     Sixty-one percent of the survey participants said that the media is
 "sometimes trustworthy" as a source of information on the housing market
 and 5% said that it is "always trustworthy." Twenty percent and 8%,
 respectively, said it is "seldom trustworthy" and "never trustworthy."
     "The media provides an important service by giving consumers the big
 picture of what is occurring in the housing marketplace, even the big
 picture in their local markets," said NAHB President David Pressly, a home
 builder from Statesville, N.C. "But despite that, local reporting can't
 convey the information that consumers consider the most when they are
 looking for a new home.
     "The fact is that even as the national market is slowing down from the
 unsustainable pace of the past few years, there are sizable numbers of
 families who need new homes. And with a wide selection of new homes to
 choose from, with mortgage rates remaining near historic lows and with
 incomes and jobs continuing to grow, the opportunities are extremely
 favorable for buyers in today's marketplace."
     Home builders are working down their existing inventory of homes fairly
 quickly and the current slowdown in production is expected by NAHB
 economists to have run its course by the middle of 2007. From that point
 forward, the industry is expecting to see a good balance in the marketplace
 between supply and demand, setting the stage for a healthy and sustainable
 trend for housing, supported by a growing U.S. economy.
     The NAHB survey of 2,000 households, including more than 1,750
 registered voters, was conducted Oct. 26 to 29.
 
 

SOURCE National Association of Home Builders