Highest level of traffic index since tax credit, but waiting for buyerinterest in new homes:  Another month of improved traffic – the third straight month now, and the highest level for the traffic index since April 2010, the last month of the homebuyer tax credit. The improved economy and stronger consumer confidence has translated into an increase in homebuyer traffic. However, buyers remain focused on bargains. This creates trouble for new homes, as homebuilders have not reduced prices by as much as existing home prices have fallen. As a result, it appears that the better homebuyer traffic is largely bypassing the new home communities when it comes to signing a contract.

Attractive prices, pent-up demand, and higher mortgage rates cause increase in traffic, but much concentrated in warm weather locations:
Buyers were led out of hibernation by the attractive prices (most pronounced on foreclosures and short sales) along with pent-up demand that is being released by the increased confidence in the outlook for the economy. In addition, the sense of urgency created by the rising mortgage rates continued, as buyers attempted to act at a time when affordability remains extremely favorable. 

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