Homebuyer traffic slowed in August, according to the latest survey from Campbell/Inside Mortgage Finance.
The survey found that all three groups of homebuyers — current homeowners, investors and first-time homebuyers — pulled back from the housing market, a sign that future sales activity might weaken.
The sharpest falloff in the HousingPulse homebuyer traffic index was seen among current homeowners, the largest group of homebuyers.
This makes sense as current homeowners are less likely to trade up if interest rates rise and home prices no longer look attractive.
But the urgency for first-time homebuyers also appears to have reduced, according to the survey.
Traffic has slowed down for current homeowners and first-time homebuyers. Investors scored below 50 in the Homebuyer Traffic Index; a reading below 50 indicates that traffic is below what is considered a “flat” level, but that figure remains relatively high.
Investor traffic is likely on the decline because there aren’t enough distressed properties on sale.
The HousingPulse Distressed Property Index, a measure of distressed properties as a share of total home purchase transactions, fell to 25.4% in August, based on the three-month moving average.
That was not only down from a distressed property share of 35.8% seen as recently as last March, but also the lowest level ever recorded by the HousingPulse survey.
The slowdown in traffic could be seasonal as summer draws to a close but brokers and homebuilders have reported increased buyer hesitancy.
Home price gains have started to moderate and new-home sales plunged in July, but existing home sales are still strong. The sales data doesn’t yet reflect the impact of rising rates because many buyers rushed to lock in interest rates before they rose further.
The impact of interest rates on sales could be more pronounced in the coming months, however.
Still, it is too early to call an end to the recovery in housing. Home prices have been lifted off their bottom and the market has stabilized. There is pent-up demand and a further increase in inventory and a moderation in prices also could encourage more buyers back into the market.
A separate survey released Monday by Bankrate.com showed that 55% of Americans believe home prices will go up in the next 12 months, while 9% forecast a decline. In upper-income households, 65% predicted a rise, while 6% forecast a decline.