First-Time Homebuyer Traffic
Took Nose-Dive in May,
Latest Campbell/Inside Mortgage Finance Survey Reveals
WASHINGTON DC (June 21) –
Homebuyer traffic nationwide tumbled in May, according to the latest
Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market
Conditions. Most of the decline was attributable to first-time
homebuyers who sharply reduced their home shopping last month.
The survey's first-time homebuyer traffic index, which measures home
shopping activity on a scale of 1 to 100, registered an anemic 35.1 in
May. This was down from an index of 63.5 in April. Since September 2009,
the index had never been below 50, which represents a flat, or neutral,
condition in home purchase activity.
“The decline of first-time homebuyer traffic is undoubtedly related to
the expiration of the federal homebuyer tax credit,” stated Thomas
Popik, research director for Campbell Surveys. “Homebuyers had until
April 30 to sign a purchase and sale agreement and receive the credit.
Once we entered the month of May, the government stimulus disappeared.”
Thanks to its own tax break, California fared better than the country
overall in terms of first-time homebuyer activity, the survey found. The
California index for first-time homebuyer traffic jumped to 63.1 in
April, but still managed to stay relatively flat in May at 49.4.
California enacted its own $10,000 credit for first-time homebuyers on
May 1, the day after expiration of the federal tax credit.
Real estate agents responding to the survey commented on the decrease in
homebuyer traffic in May, which ultimately will produce fewer closed
transactions later in the summer. “The expiration of the tax credit
caused a significant decline in buyer activity in May, with buyers who
didn't get a suitable house in time for the tax credit opting to wait
and see what happens to prices without the availability of the tax
credit. I expect to see a significant decrease in July's closed
transactions,” commented an agent in Arizona.“
"We have noticed a substantial decrease in activity since April 30th.
There are a lot less Purchase and Sales Agreements being typed and other
agents are complaining it's slow again,” stated an agent in
Massachusetts.” “I got no signed purchase agreements in May. I think the
number of closed transactions in July will be very low,” added an agent
Traffic among current homeowners seeking to upsize or downsize also
softened in the month of May, but to a lesser degree, the latest survey
found. The nationwide index for current homebuyer traffic registered
45.5 in May, down from 55.2 in April. Expiration of the homebuyer tax
credit for current homeowners was less of a factor because the tax
credit dollar incentive was lower, both on an absolute basis and on a
percent of transaction basis.
Interestingly, the proportion of closed transactions for first-time
homebuyers also declined in May, furthering a trend first observed in
April. In March, first-time homebuyers accounted for 48.2% of home
purchases; by April their proportion had declined to 43.4%. The trend
continued in May, with first-time homebuyers accounting for 42.0% of
home purchases. This decline is surprising since first-time homebuyers
have until the end of June to close transactions and receive the federal
“The first-time homebuyer tax credit, originally due to expire last
November and then extended through the first half of 2010, may have
depleted the pool of willing buyers earlier than expected,” commented
Popik. “Whether this depletion is temporary or whether it will be
long-lasting won’t be known until we measure traffic in June and July.”
The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate
Market Conditions surveys more than 3,000 real estate agents nationwide
each month and provides up-to-date intelligence on home sales and
mortgage usage patterns.
For more information
on the survey contact: John Campbell at Campbell Surveys, (202)