Market production, a leading indicator of real estate market activity that combines title agents and real estate professionals' expectations for changes in transaction volume and prices over the coming year, fell by 3.8% in the fourth quarter as compared with a year ago and by 11.8% from the third quarter, First American Financial Corp. reported Wednesday.
The survey found that confidence for growth in purchase transaction volume over the next 12 months remained positive, but was down by 8% from last quarter and down by 8.8% from a year ago.
Confidence in refinance transaction volume growth over the next 12 months declined by 15.6% from the third quarter, but was up 2.4% from a year ago.
The poll results showed expectations that prices across all property types would grow by 3.5% over the coming year, down from last quarter's expectation of 4.1%.
"Overall, bullishness about transaction volumes in the coming year waned, largely driven by the decline in refinance transaction expectations," First American's chief economist Mark Fleming said in a statement.
Pre-election uncertainty leading and increasing confidence in the likelihood of Federal Reserve rate increases dampened expectations for housing demand and brought down the overall price growth forecast, Fleming said.
He noted that the survey of title agents and real estate professionals was conducted prior to the Nov. 8 election, when respondents were asked for their perspective on what the outcome of the election might mean for the housing market.
"Based on the responses of title agents and real estate professionals and their relative preference for Donald Trump, it appears that the uncertainty created by increased regulation and the growing complexities of compliance have many title agents and real estate professionals believing that less regulation would be more beneficial to the housing market in the long run."
Now that there is more political certainty, Fleming said, "the message of title agents and real estate professionals to the new administration is: Provide more regulatory and compliance certainty and the housing market will benefit."
