November 8th, 2013 2:12 PM by Karyn Smith
October Survey of Real Estate Agents:
Another Weak Month for Traffic, Though Some Saw More Signs of Life in Late Oct.
Pricing power fading as sluggish demand persists: Add the government shutdown to the list of recent buyer
concerns. Even as mortgage rates pulled back (which had ostensibly been the main driver of weaker trends this
summer), buyers headed to the sidelines in October, especially in markets dependent on the federal government or
contractors as the government shutdown ensued. The end result was that after several months of weakening demand,
price appreciation appears to be moderating in most markets. One potential bright spot is that we saw some comments
from agents toward the end of the month highlighting a pick-up in activity after the shutdown and debt ceiling debate
were resolved, though it wasn’t enough to move the needle on our index so we will watch closely in November.
Buyer traffic falls again as government shutdown leads to further hesitation: Our buyer traffic index fell to 28 in
October from 36 in September, indicating weaker levels below agents’ expectations (any reading below 50). This is the
lowest level since September 2011. Agents had previously highlighted growing hesitancy from buyers given the sharp
move higher in home prices and mortgage rates, but even as rates came in, buyer confidence took a hit from the
government shutdown and debt ceiling debate, even in markets which on the surface wouldn’t appear overly reliant on
the federal government. Weakness was again broad-based, and particularly acute in Seattle, Orlando, Baltimore and
Sacramento. Dallas remained at healthy levels, while Denver, Houston and Vegas all improved sequentially.
Price appreciation continuing to moderate: Our home price index fell to 57 in October from 72 in September, still
pointing to higher home prices, but much less broad-based. In addition, 7 of the 40 markets we survey saw sequential
declines (vs. no markets seeing declines in each of the past 8 months). Agents also noted increased use of incentives.
Tight inventory levels remain supportive, but are being outweighed by lower demand.
Longer time needed to sell: Our home listings index pointed to stable inventory levels, but it took longer to sell a
home in October as our time to sell index dropped to 42 from 57 (below a neutral 50). This is typically a negative
indicator for near-term home price trends.
How Do the Recent 30 Days Compare to
the Prior 30 Days...
Home Prices Incentives
Time to Sell
Increased Remained the same