Southeastern Housing Update: Gains Show Signs of Softening
The Atlanta Fed’s monthly poll of broker and builder business contacts indicated that home sales remained ahead of the year-earlier level (see the chart), but growth measured year over year continued to slow.
Both builders and brokers also reported a sharp drop in buyer traffic on a year-over-year and month-over-month basis (see the chart). Comments by business contacts indicate that seasonal factors, a rising mortgage rate environment, and uncertainty caused by the impending government shutdown are responsible for the slowdown in traffic and home sales.
Most brokers continued to report home inventory levels were below the year-earlier level, and reports from builders were mixed (see the chart).
Both builders and brokers continued to report home price gains in September (see the chart). However, brokers indicated the strength of home price appreciation appears to be moderating.
The outlook for new home sales growth over the next several months remained positive and stronger than expectations from a year ago, while the outlook for new home construction has softened a bit from recent reports and was a bit less upbeat than year-earlier responses (see the charts).
When asked to look ahead over the next 12 months, builder contacts indicated that access to development finance and lot availability posed the most significant risks to their outlook (see the table). Interestingly, most contacts considered rising mortgage rates and consumer confidence to be only modest risks.
The outlook for sales growth among Southeast brokers continued to weaken from earlier this spring, and expectations are a bit weaker than expectations a year earlier (see the chart).
Note: September poll results are based on responses from 53 residential brokers and 25 homebuilders and were collected October 7–16, 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 let us know by sending a note to RealEstateCenter@atl.frb.org.
By Whitney Mancuso and
Jessica Dill, senior economic research analysts in the Atlanta Fed's research department
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