Southeast Housing Update: Home Sales Up, but Heated Pace Cools
The Atlanta Fed’s monthly poll of regional brokers again indicates that home sales in July remained ahead of the year-earlier level, but growth appears to have softened a bit (see the chart).
Reports from home builders in July also indicated that new home sales remained slightly ahead of the year-earlier level (see the chart).
Noting the rise in mortgage rates over the past few months, we asked our contacts if the increase had affected their business. Nearly half of builders and brokers said that rising mortgage rates had no impact on their business while the remainder said that rising rates had affected their business, and it was mostly negative. Contacts said that rising mortgage rates had slowed buyer traffic, disqualified some, and forced some to move to lower price points (see the chart). Those who thought the increase in rates had a positive impact noted that buyers were moving ahead to lock in lower rates before rates moved higher.
We also revisited our questions on access to financing in this month’s poll. Brokers noted improving access to mortgage finance, and builders continued to indicate that it remained challenging to secure construction finance (see the charts). Many brokers also commented that new home construction finance was difficult for builders to get in several markets.
Inventories continued to decline on a year-over-year basis, and contacts indicated that low inventories were restraining sales and pushing prices up in some markets. Overall, home prices continued to rise by most accounts. Builders said that prices rose slightly compared with a year earlier, and reports from brokers indicated that price appreciation was stronger (see the chart).
Another question we revisited was to gauge investor participation in southeastern markets. Overall, brokers indicated that investor participation in the market has held steady; however, they still report that investors are buying up inventory and to some extent shutting out the first-time buyers and existing home owners looking to buy. Florida contacts did note that investor participation in the market had waned modestly from earlier reports (see the table).
The outlook for home sales and construction growth over the next several months remained positive and marginally better than the outlook among contacts a year earlier (see the charts).
Note: July poll results are based on responses from 59 residential brokers and 23 homebuilders and were collected August 5–14, 2013. The housing poll's diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Positive values in the index indicate increased activity, and negative values indicate decreased activity.
If you are a real estate broker or homebuilder and would like to participate in this poll, please send a note to RealEstateCenter@atl.frb.org.
By Whitney Mancuso, a senior economic analyst in the Atlanta Fed's research department
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