Confidence in the U.S. Real Estate Market Retreats in May: Survey

After rising for two months straight, forward-looking confidence in the U.S. real estate market fell in May, according to the latest ""Real Estate Confidence Index (RECI) survey results"":http://agent.point2.com/RECI/RECI_May2010_Report.pdf recently released by ""Point2 Technologies."":http://www.point2.com/index.asp

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The national RECI, a monthly survey that tracks forward-looking market sentiment of more than 50,000 real estate professionals across the country, slipped 1.72 percent in May compared to the previous month, as all three index variable components retreated. On the RECI scale of one to 10, with one being ""bad"" and 10 being ""good,"" the index score came in at 5.72 for May, down from 5.82 in April.

Opinion of the market's current state, one of components of the index, dropped to 5.22, down 1.51 percent from April. The slump came after this variable surged 5.16 percent from March to April, which reflected expectations for solid

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market activity ahead of the now-expired homebuyer tax credit, Point2 said.

In addition, the survey found that the short-term (three to six months) optimism/pessimism variable declined 2.26 percent to 5.61 in May, indicating a higher level of uncertainty across most markets for the spring and summer season. And the long-term (12 to 18 months) optimism/pessimism variable fell 1.71 percent to 6.32.

According to Point2, long-term concerns regarding the end of the government tax incentive program permeated RECI respondent feedback in most markets around the country in the May survey. In fact, Point 2 said a number of brokers and agents have already reported and related sudden retreat in market activity directly to the expiration of the tax credit.

""Shadow inventory,"" described as foreclosed properties currently thought to be held back by lenders and expected to trickle into the market over the coming months, was also cited as a major source of concern by many real estate professionals who participated in the survey. These respondents expressed fears that lenders could be manipulating market prices by holding onto such inventory â€" a practice expected to dampen markets and home prices for an extended period of time.

Additionally, Point2 said the high jobless rate and the risk of rising interest rates were frequently referred to as reasons for long-term concern.