Home affordability continued to be a key concern in the third quarter of 2016, with renters expressing concerns about limited housing inventory and rising home prices in their community. However, the National Association of Realtors says misconceptions about the required down payment may be causing unnecessary delays among young adults who are interested in purchasing a home.

In its latest Housing Opportunities and Market Experience (HOME) survey, most respondents continued to say they thought it was a good time to buy a home. Seventy-one percent of all respondents held this opinion, including 78 percent of current homeowners and 60 percent of renters.

Buyer confidence was affected by a variety of different factors. Younger respondents, those with lower incomes, and those in urban areas were more likely to be pessimistic about the home buying environment. Only 65 percent of respondents in the West, where home prices have grown rapidly in recent years, thought it was a good time to buy. The share stood at 72 percent in the Northeast and 73 percent in both the Midwest and the South.

"This summer's historically low mortgage rates injected some additional demand into the market, but the dearth of homes for sale continues to keep a lid on sales but not prices," Lawrence Yun, chief economist at the National Association of Realtors. "Given the stiff competition and limited homes available at the lower end of the market, it's not surprising at all that those under the age of 34 and in the West are the least confident about it being a good time to buy."

Thirty-six percent of respondents who did not own a home said they thought it would be somewhat difficult to qualify for a mortgage. Twenty-nine percent considered that it would be very difficult, 20 percent thought it would not be very difficult, and 15 percent thought it would not be difficult at all.

While a majority of people continued to hold positive opinions about the feasibility of buying a home, the share has decreased gradually in recent months. Seventy-five percent of all respondents in the HOME survey for the first quarter of the year and 74 percent in the second quarter's survey said they thought it was a good time to buy a home. In the first ever HOME survey in December, 68 percent of renters thought it was a good time to buy a home.

"It's possible some of the hesitation about buying right now among young adults is from them not realizing there are mortgage financing options available that do not require a 20 percent down payment, which would be north of $100,000 in some expensive areas in the country," said Yun. "In fact, most first-time buyers put down much less. In the 35-year history of NAR's 'Profile of Home Buyers and Sellers'—the longest running survey series of national housing data—the average median down payment has been 5 percent for first-time buyers."

Thirty-seven percent of respondents under the age of 34 in the latest survey said they thought they needed to make a down payment of more than 20 percent of a home's purchase price to buy a home. Just 13 percent thought they needed 5 percent or less of the purchase price.

However, the misconception was common across all age groups, income brackets, and education levels. Fewer than 20 percent of respondents in each division said they thought it was possible to buy a home with a down payment of 10 percent or less.

Older respondents, those with lower education levels or annual income, and those who do not currently own a home were also more likely to believe a down payment of more than 20 percent was necessary for a home purchase. Thirty-six percent of renters, 41 percent of those making less than $50,000 a year, 43 percent of those over the age of 65, 46 percent of those without a college education, and 48 percent of those who currently live with someone else held this opinion.

Younger homeowners were most likely to have received down payment assistance from a parent or relative. Thirty-four percent of homeowners under the age of 34 said a family member had assisted them with the purchase.

"Creditworthy prospective buyers should know that many lenders now offer safe, sustainable loans with as little as 3 percent down, and obtaining a mortgage isn't as difficult as it was in the immediate years after the downturn," said Tom Salomone, president of the National Association of Realtors and a real estate brokers in Coral Springs, Florida. "Every buyer is different. Before deciding how much to use on a down payment, buyers should carefully review their financial situation and make sure they have enough money set aside after the home purchase for unexpected expenses and emergencies. A Realtor will walk through what to consider based on what a buyer can comfortably afford."

Fifty-six percent of respondents said they thought home prices in their neighborhood had gone up in the past year, while 34 percent thought they had stayed the same and 9 percent believed they had gone down. Respondents in rural areas were most likely to indicate home price decreases in the past year, while respondents with higher incomes, those in suburban areas, and those living in the West were most likely to say that home prices in their community had gone up.

Forty-seven percent said they expect home prices in their neighborhood to stay the same in the next six months, while 44 percent believe they will increase and 9 percent expect that they will decrease. Renters, those living in urban areas, and respondents from the West were most likely to expect short-term home price increases.

Seller optimism increased in the third quarter HOME survey, with 63 percent of respondents saying they think it is a good time to sell a home. Seventy-one percent of respondents making more than $100,000 a year, 70 percent of those from the West, 68 percent of those between the ages of 55 and 64, and 67 percent of homeowners thought it was a good time to sell.

Economic outlooks remained relatively unchanged. Fifty-two percent of respondents said they thought the U.S. economy was not improving and 48 percent said they thought it was improving, the same distribution as at the start of the year.

Respondents under the age of 34 were most likely to think the economy is improving, with 58 percent holding this opinion. Rural respondents were most likely to have a pessimistic opinion on this subject, with 63 percent saying they did not think the economy is improving.

The survey's Personal Financial Outlook Index, which measures respondents' confidence that their personal financial situation will be better in six months, went up slightly during the third quarter. This index, measured on a 100-point scale, increased from 57.7 in June to 58.6 in September.

The data for the third quarter HOME survey was collected from a random sample of U.S. households between June and September. The report includes responses from 2,761 households.