Every month SentriLock, LLC. provides NAR Research with data on the number of properties shown by a REALTOR®. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future. In the latest reading, the diffusion index for foot traffic tumbled more than 20 points to 39.4 in March.
The decline in the index this month reflects both low inventories and strong traffic last year. This change breaks a streak of five consecutive months above the “50” mark. The 50 mark indicates that more than half of the markets in this panel had stronger foot traffic in February of 2013 than the same month a year earlier. This reading does not suggest how much of a decline in traffic there was, just that the majority of markets experienced less foot traffic in March of 2013 compared to a year earlier. Traffic slowed significantly in the Midwest where it expanded rapidly a year ago.
Record low mortgage rates, stabilizing prices, and more than a million new jobs in less than six months have combined to boost consumer confidence and home sales. Sustained demand from both investors and would-be homeowners has driven supplies down to their lowest levels in nearly a decade. While foot traffic has eased from its heady pace, it remains at a strong plateau. Tight supplies are likely to drive more price appreciation this spring. This trend will push more underwater borrowers into positive equity and bring more sellers to the market. Supply should rise through the spring in the typical seasonal sales pattern.
