To recap the stages of a housing downturn
1) weakness in housing market sentiment. Check. Builder and buyer sentiment very pessimistic
2) measures of buyer traffic fall. Check. Builders reporting very low buyer traffic at their sites. Same at listings.
3) measures of housing activity start to fall. Check. Mortgage applications down 28% YOY. Pending sales down big. The next stage:
4) price drops
the first three stages happened very quickly. Stage 4 should be here by fall.
Those stages are all a definite concern for sure. I saw where the NAHB index edged down to 67 in June measuring builders confidence and the buyer traffic index really got slammed falling five points to 48 exactly what you’re pointing out.
One economist mentioned that it was such a sellers market for so long that we are now seeing balance returning which is a good thing as long as it doesn’t tilt too much one way but sees more pain ahead for the year. I’m not so sure about that statement of balance returning, I would be interested in your opinion on that one.