Drop in August homebuyer traffic could signal fewer sales

Homebuyer traffic — a strong indicator of future home sales — was down in August, with the sharpest drop seen among current homeowners, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

The survey’s indexes showed homebuyer traffic for current homeowners and first-time buyers remained above 50, meaning they’re “relatively strong.” Investor traffic scored below 50 in August, indicating traffic dropped below what is considered a “flat” traffic level.

The drop in investor traffic corresponds with a continuing slide in the share of REO and short-sale transactions, which made up 25.4 percent of sales in August, based on a three-month moving average, down from 35.8 percent in March.

Anecdotal reports from real estate agents suggest higher mortgage rates are denting home purchases in some parts of the country, an effect that could become more pronounced in the months ahead, some agents warn.

“The market is slowing dramatically following the increase in interest rates,” said a California real estate agent. “Numbers in October/November will start to show the price plateau and sales volume decline.” Source: campbellsurveys.com