Realtor concerns about the low housing supply relative to buyer demand, tougher lending standards, and lackluster growth in income and savings continued to constrain home sales last month in several markets, according to the latest REALTORS® Confidence Index, based on responses of more than 2,800 REALTORS® about their transactions in May.
REALTORS® report that the biggest barriers for would-be buyers are student-loan debt, higher mortgage insurance rates, and the inability to pay closing costs. Also, in some markets, REALTORS® report that the cost of obtaining flood insurance is hampering potential sales.
The latest index showed that REALTOR® confidence about market conditions, expectations, buyer/seller traffic, price trends, and issues affecting the real estate market was mostly unchanged in May compared to April, although there was a slight dip in confidence about the outlook for the next six months across all markets.
Here’s an overview of some indicators from the May report:
Buyer traffic drops slightly: The buyer traffic index dropped slightly to 60 from 63 in April, while seller traffic stayed mostly flat at 43. Any index reading above 50 indicates more REALTORS® view traffic conditions as “strong,” while readings below 50 indicate “moderate” or “weak” views of conditions. Also, NAR’s tracking of foot traffic, using Sentrilock lockbox data, shows that foot traffic eased modestly in May to 44.5.
Townhouse, condo market sluggish: REALTORS® considered the markets for townhouses and condos generally as “weak,” with index numbers at 46 and 41, respectively, for each sector. REALTORS® reported that obtaining mortgage financing for condos with FHA approval issues as a significant hurdle weakening the sector.
Home prices rise moderately: About 68 percent of REALTORS® reported that the price of their “average home transaction” is higher today than a year ago. The majority of REALTORS® expect home prices to rise in all states and the District of Columbia over the next 12 months, with the median expected price increase to be 4 percent.
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