Limited Financing Constrains Housing Market in May, Survey Finds

WASHINGTON, D.C. (June 20) – Homebuyer traffic, a major indication of future home sales, tumbled in May, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

The closely-watched survey's traffic index for first-time homebuyers fell from 51.7 in April to 45.3 in May, while the traffic index for current homeowners fell from 51.6 to 44.8. Meanwhile, the traffic index for investors fell from 55.3 to 54.6. Any index value less than 50 indicates a decrease in traffic from the previous month. For the previous three months, the first-time homebuyer and current homeowner indexes had been well above 50. Because traffic typically leads to closed transactions, these significant declines could indicate a downward shift in the housing market in the coming months.

The HousingPulse Survey’s Distressed Property Index, a key measure of the health of the U.S. housing market, fell slightly to 46.7% in April, although sales of distressed properties continued to account for nearly half of the market.

The monthly HousingPulse Survey also showed the proportion of first-time homebuyers in the housing market rose to 37.3% in May, from 35.7% in April. The gap between first-time homebuyers and distressed property supply closed to 9.4 percentage points in May, down from 12.0 percentage points in April. Back in May 2010, the gap between first-time homebuyers and distressed property supply was just 5.0%.

First-time homebuyers absorb housing supply, while move-up and move-down buyers produce no net take-up in inventory. When the supply of distressed properties exceeds the demand from first-time homebuyers, investors must step into the market to buy these properties, often at bargain-basement prices.

“The fall in homebuyer traffic indexes and other data show that this spring-summer home-buying season will be significantly below last year’s,” said Thomas Popik, research director for Campbell Surveys. “First-time homebuyers have difficulty getting mortgage financing and current homeowners are often locked into properties with negative home equity. That leaves investors to take up the slack.”

Investors accounted for 21.6% of the housing market in the month of May, down from 23.0% in April. Survey respondents indicated that most investors buying through real estate agents are using personal funds. Hedge funds and other large distressed property investors are rarer, except in coastal regions of the United States such as California. Use of retirement funds, home equity lines of credit, and bank savings accounts is common for individual investors and small groups.

Survey results show that investors lack access to bank financing. Seventy-four percent of investors bought properties using cash during the month of May, while only 11% of first-time homebuyers bought using cash. As more investors move from flipping properties to a hold-and-rent strategy, their limited sources of personal funding are tied up.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey queries 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 at (202) 363-2069 or






After the November elections, how long will it take for a new Congress and White House to pass GSE reform legislation?

I’m confident a bill will be passed the first year.


2 to 3 years. GSE reform is complicated.


Sadly it won’t happen in a Clinton or Trump first term.


Not in my lifetime.


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