WASHINGTON (Reuters) - Prospective homebuyers believe now is a good time to buy, what with low interest rates and depressed home prices. It's the sellers who are the problem, according to a study released on Tuesday by the Mortgage Bankers Association.
The study of consumer sentiment towards home buying in the wake of the Great Recession showed that almost 80 percent of American households believe buying conditions are favorable, but home-selling sentiment is at an historic low.
The negative home-selling sentiment is strongly related to difficulty in finding buyers at desired sales prices, as well as large overhang of mortgages past due or on foreclosure, the mortgage trade group said.
The study by Syracuse University professor Gary Engelhardt, analyzed University of Michigan's Survey of Consumer Attitudes to examine feelings towards home ownership before, during and after the most recent recession, benchmarked against data from the past 30 years.
Over the next five quarters, the study forecast home buying sentiment to remain around its current and long-run average levels, but selling sentiment is expected to stay mired at its current historic-low levels.
This suggests that selling sentiment, and hence, market activity will remain sluggish in the near term.
"In economic terms, as market values have fallen, potential sellers have not adjusted their price expectations downward fast enough to bring buyer and seller sentiment in line with one another," Engelhardt said in a statement.
He said sellers are still pegging their price expectations to past values, such as purchase prices or transaction prices for comparable properties in the past. And underwater homeowners who owe more than they can sell their homes for would have to bring cash to the closing table. The incentive to wait for better pricing is strong.
(Reporting By David Lawder; editing by Bob Burgdorfer)