Homebuyer traffic was up in February, as slowly rising mortgage rates at that time prompted some buyers to lock, according to a monthly survey of real estate agents.
But agents in some markets continued to find that despite buyer interest, underwriting standards were still tight and in some cases getting more strict, limiting potential buyers' ability to obtain a loan.
According to an agent in Atlanta, "buyers are turned off by how difficult it is to obtain a mortgage."
Credit Suisse's monthly agent survey gauges perceptions of traffic, inventory and prices. The traffic index increased for the fourth straight month, up 2.9 points from January to 42 in February-but a reading below 50 indicates negative or worsening trends. The traffic index has increased every month since declining to 16.3 in October and is at its highest level since April 2010, the last month that buyers could take advantage of the homebuyer tax credit. The price index improved to 30 in February, up from 26.9 in January.
"The question is whether demand will be strong enough to meet the spring supply, or if we will see further price reductions," said lead analyst Daniel Oppenheim. "Our sense is that demand for distress listings will remain strong from investors, but that nondistress sales may see lower traffic, leading to price reductions this spring."
Markets with higher levels of distressed inventory-including Las Vegas, Phoenix, Southern California and Tampa-are pushing traffic levels up, but those buyers are typically investors buying real estate owned properties with cash.
Worries about unemployment continue to affect home buying. In Charlotte, N.C., one agent told Credit Suisse that "a lack of jobs" has people staying away from housing right now, as buyers don't want to commit to a mortgage if they think they'll lose their job in a few months.
"People want more job security before they put themselves out there with a mortgage," an agent in Chicago said. Others noted a "lack of available loan options" and "difficulties in getting approved." An agent in Jacksonville, Fla., said, "people are gaining an increasing interest as mortgage rates creep higher," while across the state an agent in Tampa reported "mortgage requirements are increasing."
"Lenders are looking for 700-plus credit scores and higher mortgage insurance premiums on FHA," a Phoenix agent said referencing HUD's decision to increase annual premiums for FHA-insured loans in April.
A Washington agent expressed similar concerns, saying buyers were looking to lock in loans ahead of "rising rates and upcoming increases in the FHA mortgage interest premium rates."
Comments(0)