The First American Real Estate Sentiment Index reveals that during the first quarter of 2018, transaction growth sentiment is 4.1% higher than a year ago, although down 0.2% from the end of 2017.
Compared to a year ago, this increased sentiment in transaction growth over the next 12 months is driven by the refinance sector (up 9.9% year-over-year) while the purchase sector is up just 0.2%.
However, compared to the fourth quarter of 2017, refinance transaction growth sentiment for the next 12 months is down 7.8% while the purchase sector is up 6.2%.
“Overall, optimism among title insurance agents and real estate professionals decreased slightly this quarter, likely because they indicated refinance transaction volume is expected to fall in the coming year. However, optimism for growth in purchase transaction volume increased compared with a year ago,” said Mark Fleming, chief economist at First American.
“Increasing mortgage rates clearly impacted optimism for the refinance market, but despite this, optimism remains strong for increased purchase demand,” he added.
Impact from tax code
Almost half of respondents (46%) said that the new tax code will not significantly impact sellers’ willingness to list their homes and 37% said it would have no impact at all on their decision.
A similar share of respondents believe that buyer demand will not be dampened by the new tax code.
Just 17% felt that there would be a significant impact on sellers and 23% thought that of buyer demand.
“When it comes to the new tax code, title agents and real estate professionals – the folks that spend their days closing real estate transactions – do not believe that the new tax code will have a meaningful, negative impact on the housing market,” said Fleming.
“In general, you could argue that title agents and real estate professionals surveyed believe the tax code does not meaningfully drive housing prices, supply or demand,” he said. “Title agents and real estate professionals know that when it comes to buying and selling a home, consumers consider more than just the tax consequences of homeownership.”
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