Veterans could drive homebuying demand in 2025
A recent survey found that while both veterans and civilians are feeling more prepared to buy, veterans are more likely to purchase a home in the next year.
Military veterans could play a key role in driving up homebuying demand over the next several months despite looming uncertainties about interest rates, according to a new survey from Veterans United Home Loans.
Buyers feeling more prepared: The survey of more than 900 veterans and civilians found that both groups reported higher overall levels of "homebuying readiness" in the third quarter than in any previous quarter since early 2023, with veterans indicating greater readiness than their civilian counterparts. The Homebuyer Readiness Index is a composite of data around financial and economic optimism as well as homebuying timelines.
Veterans looking to buy soon: Among veteran respondents, 74% said they were ready to buy within the next 12 months compared to 69% of civilians — a turnaround from a year ago, when the figures were nearly reversed, with 67% of veterans and 75% of civilians saying they were ready to buy.
Economic optimism fueling homebuying confidence: The improving health of the U.S. was a significant factor in the findings. More than half of all respondents expect the economy to be better off in the next year; in previous surveys, economic optimism never topped 50%.
Recent data on jobs and inflation suggest the economy is moving in a good direction overall despite the affordability and inventory challenges in the housing sector.
Veterans more confident that rates will fall: When asked about mortgage rates specifically, veterans were more likely than civilians to say they expect rates to be lower next year, with more than a third of veterans (35%) predicting rate drops — significantly up from the previous quarter, when just 25% said they expected lower rates.
About a quarter of civilian respondents expressed confidence that rates would fall in 2025.
In a separate survey in September — when mortgage rates fell to the lowest levels of the year — Fannie Mae reported record-high optimism around rates, with 42% of consumers expecting rates to decline in the next 12 months, well up from 24% in June.
"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," Chris Birk, vice president of mortgage insights at Veterans United, said in a press release.
But as mortgage rates continue to fluctuate, applications have declined, so it's unclear if buyer readiness will ultimately translate to more home sales.
Money worries decline: Overall, would-be buyers are feeling much better about their personal financial situation compared to a year ago, with 65% of veterans and 70% of civilians saying they believe their finances will improve in the next year. That's well up from the third quarter of 2023, when just 56% and 58%, respectively, reported such optimism.
The potential spoilers: Still-rising home prices and elevated mortgage rates are the two primary factors that could disrupt this momentum going forward, the survey found. However, both veterans and civilians expressed less concern about these issues in Q3 than they did last year.
"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.