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 eased modestly from 66.3 in November to 63.1 in December.
Despite November’s decline in the diffusion index, the measure stands well above 50, indicating that more than half of the markets in this panel had stronger foot traffic in December of 2012 than the same month a year earlier. This reading does not suggest how much of an increase in traffic there was, just that the increase was broadly spread across the US. Foot traffic had seesawed for several months, but this pattern appears to have stabilized.
Given the strength of sales last spring, the December reading suggests that sales through the early spring of 2013 will also be robust. Fundamentals are in place as record low mortgage rates and modestly improving employment continue to boost buyer confidence. Though inventories are constrained in portions of the U.S., rising prices will help to unlock inventory held off market by underwater owners and equity-strapped fence sitters. Finally, clarity on the QM and QRM rules should provide lenders with the clarity needed to begin to ease underwriting to sound, historical norms later in 2013.