While refi confidence booms, continued inventory shortages mute the outlook for the purchase transactions
Confidence in the real estate market improved in the fourth quarter among independent title agents and other real estate professionals, according to the Real Estate Sentiment Index (RESI) released by First American Financial.
The RESI found that an increase in overall transaction volume growth over the next 12 months by 0.5% on a quarter-over-quarter basis and by 5.3% on a year-over-year basis.
The overall increase was driven by 4.6% quarter-over-quarter and 2.7% year-over-year increases in confidence in refinance transaction volume growth over the next 12 months. This was offset by a 2.7% decrease in confidence in purchase transaction volume growth over the next 12 months compared to the third quarter. This figure increased 7.6% compared to the fourth quarter of 2016.
Additionally, the survey revealed that respondents expect a 0.5-percentage-point decrease in prices across all property types over the next 12 months as compared with the third quarter.
“Optimism among title agents and real estate professionals increased this quarter, as they expressed confidence that transaction volume will grow in the coming year. The increase in optimism was primarily driven by the rise in expectations among survey respondents for refinance volume growth, possibly indicating confidence that low rates will continue to benefit the real estate market,” First American Chief Economist Mark Fleming said. “Supply-side challenges may be the reason for the decline in optimism for the residential purchase market.”
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The RESI found that an increase in overall transaction volume growth over the next 12 months by 0.5% on a quarter-over-quarter basis and by 5.3% on a year-over-year basis.
The overall increase was driven by 4.6% quarter-over-quarter and 2.7% year-over-year increases in confidence in refinance transaction volume growth over the next 12 months. This was offset by a 2.7% decrease in confidence in purchase transaction volume growth over the next 12 months compared to the third quarter. This figure increased 7.6% compared to the fourth quarter of 2016.
Additionally, the survey revealed that respondents expect a 0.5-percentage-point decrease in prices across all property types over the next 12 months as compared with the third quarter.
“Optimism among title agents and real estate professionals increased this quarter, as they expressed confidence that transaction volume will grow in the coming year. The increase in optimism was primarily driven by the rise in expectations among survey respondents for refinance volume growth, possibly indicating confidence that low rates will continue to benefit the real estate market,” First American Chief Economist Mark Fleming said. “Supply-side challenges may be the reason for the decline in optimism for the residential purchase market.”
Related stories:
Rate uncertainty dampens Q3 real estate market outlook
Millennial homebuying is the same as previous generations
