Overall confidence for growth in transaction volume through the next 12 months fell 4.8% from the second quarter and 9.7% from the year-ago period. Confidence that the volume of purchase transactions will grow over the next 12 months dropped 5.6% on a quarter-over-quarter basis, but increased 0.2% from last year. Confidence in refinance transaction volume growth over the next 12 months fell 3.8% from last quarter and decreased 20% from the year-ago quarter.
According to Mark Fleming, chief economist at First American, the outlook for purchase growth was driven by strong millennial demand, while the decline in confidence for refinance growth may reflect expectations of a rate increase in September.
“In many parts of the nation, the 2017 housing market has been defined by the shrinking number of homes for sale amid strong demand. In the third-quarter RESI survey, 66% of title agents and real estate professionals indicated that there is a shortage of inventory of homes for sale in their home markets,” Fleming said. “Approximately 77% of title agents and real estate professionals characterized the severity of the shortage of homes for sale as moderate or high. In fact, 81% of title agents and real estate professionals agreed that the lack of inventory is the primary reason for house price appreciation in their market, with 20% of those strongly agreeing with this statement.”
The RESI survey also asked respondents to identify factors affecting inventory shortages in their markets. Almost half said the main reason is that homeowners are afraid that they will not be able to find something to buy. Additionally, 26% said the main reason was the absorption by first-time homebuyers of a large share of available homes. Other reasons cited by respondents were a lower-than-market mortgage rate for the homeowners (11.3%), insufficient or negative equity (10.6%), and demand from foreign buyers (4.6%).
Refi apps near 2017 high
Refinance applications continue gains amid slide in total activity
Independent title agents and other real estate professionals are less confident about the real estate market than they were both a quarter and a year ago, according to the Real Estate Sentiment Index (RESI) released by First American for the third quarter.