Some highlights from the Credit Suisse Monthly Survey of Real Estate Agents:
Traffic index drops to levels not seen since credit crisis of late ’08:
Our Monthly Survey of Real Estate Agents indicated a sharp fall-off in traffic in June, adding to the slowdown that occurred in May following the end of the homebuyer tax credit. Our concern is that what would have been a short lull in demand following the end of the tax credit will now turn into a more prolonged period of weakness as faltering buyer confidence and job market concerns add to the troubles. We continue to expect weakness to persist at least through summer and now see some risk to our expectation that demand will begin to improve again in the fall.
Another round of declining home prices seems inevitable with the high and rising inventory coupled with limited traffic:
Our price index dropped to 32.1 in June from 38.9 in May, with June’s level being the lowest since June ’09. Agents noted sellers are beginning to capitulate on home prices in many markets, and we expect further pressure given the combination of the weak traffic and high inventory levels. This is supported by our time to sell index, which fell to 29.6 from 42.6 in May, with lower readings pointing to a longer time needed to sell a home (a negative leading indicator for pricing).
Data for Chicago:
Agents’ commentary in June reflected similar themes from our May survey, in which the market was still feeling the effects of the pull forward from the homebuyer tax credit. One agent mentioned, “I think the weakness still has to do with the tax credit. There are no buyers to be found. People lost their sense of urgency.” Other agents mentioned a lack of confidence in the economy, and “uncertainty over one’s employment status.” Fears over price declines also kept buyers on the sidelines, as buyers have become “less confident in price stability”. However, some agents did note that lower interest rates have created some demand, but that overall levels were still very weak.