Realtors Complain About a Summer: Client Pipeline Tracker
Buyers failed to bite this summer, despite falling mortgage rates. It has agents who are about as bad in their business prospects as they are heading into the NAR settlement era, according to Intel’s Client Pipeline Tracker.
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As mortgage rates continue to fall, real estate agents are increasingly able to imagine a future where more seller clients are lured back to the market.
There may not be many buyers waiting to meet them.
According to Intel’s Client Pipeline Tracker metric, agent sentiment toward their future revenue pools reached a 10-month low in late August.
This deteriorating attitude has been driven mainly by a reported thinning of the buyer pipeline over the past twelve months – and a growing realization that first-time buyers will remain difficult to recruit in the coming year.
Client Pipeline Tracker score in August: -10
- Previous score: -7 in July
- Recent peak: +7 in January
Graphics by Daniel Houston
The Client Pipeline Tracker is a current measure of agent sentiment toward the pool of potential real estate buyers and sellers. The statistic is powered by the monthly Inman Intel Index survey of real estate professionals.
This deterioration in expectations over the past month coincides with the immediate aftermath of the August 17 deadline for changes resulting from the NAR settlement.
However, an Intel study of its own surveys and purchase loan data shows that market forces are also weighing heavily on the brokerage industry.
Read the full breakdown of the latest Client Pipeline Tracker results in the report below.
Buyers beware
Intel’s Client Pipeline Tracker is a compilation of how agents feel about their buyer and seller pipelines – both over the past year and in the near future.
Intel described the full methodology in this post, but here’s a quick refresher on how to interpret the scores.
- A score of 0 represents a neutral period in which customer pipelines are neither improving nor deteriorating.
- A positive score reflects a market in which the customer pipeline has improved, or is still in progress this is generally expected to improve in the next 12 months. The higher the rating, the more confident agents are that conditions are moving in a positive direction.
- A negative score suggests that conditions in the customer pipeline are, or are, worsening generally expected will become even worse in the coming year.
An extremely positive combined score falls somewhere in the neighborhood +20. This type of score would mean that a large portion of the industry agrees that pipelines are improving and will continue to improve.
An extremely negative combined score, on the other hand, comes closer -20. That’s down slightly from where the industry was in September, the first time Intel questioned agents about its pipelines.
For the four separate components that contribute to the score, the results are as high as +50 or so low -50 are sometimes observed.
Here are the component scores for August and how each sentiment category has changed from the previous month.
CPT component scores
July → August
- Current buyer pipelines: -33 → -41
- Future buyer pipelines: +2 → -5
- Current seller pipelines: -18 → -18
- Future seller pipelines: +2 → +5
This represents a clear downward shift in the conditions of the buyer pipeline – both today and in terms of what is expected to happen over the next twelve months.
The latest figures seem to confirm that last month’s slight improvement in buyer pipeline was only a month ago. They also contribute to a broader pessimistic trend that has only deepened since the NAR settlement was announced in March.
Notably, in August, brokers even reported a rise in optimism when it comes to their listing pipelines.
- 35 percent of agents told Intel in late August that they expect their sales pipelines to be heavier in a year — an increase of 31 percent the previous month.
A possible contribution to this? Recent economic data has made the path ahead clearer for the Federal Reserve.
Inflation has cooled, job growth is slowing and “the time has come for policy adjustment,” Fed Chairman Jerome Powell said Aug. 23 at the Jackson Hole economic conference in Wyoming.
That could mean interest rates will fall in the near future, removing a persistent barrier for homeowners to trade in their ultra-low mortgage rates for a new loan at current prices.
But brokers, despite being well aware of these signals, seem to have more pressing issues on their minds.
Trends overshadowed
It is unclear how much pessimism among officers can be attributed to the August 17 deadline, and how much is related to actual operating conditions on the ground.
But looking at the data, we can say that both influence officers’ attitudes.
When the NAR settlement is most on officers’ minds, they tend to report a more pessimistic view about their future buyer prospects.
The two biggest single-month declines in the Future Buyer Pipeline Score each occurred after major developments in the litigation:
- the largest in late March, when the NAR settlement was first announced and scored the future buyer pipeline fell by 19 points;
- and the second largest last month, which was agent sentiment toward future buyer pipelines fell by 7 points immediately after the NAR changes took effect.
But these are not the only factors that potentially weigh on agents.
- Existing home sales, as reported by NAR, remain extremely low – approximately on an annual basis 4 million per year or below.
Even in recent weeks, as mortgage rates continued to fall, buyers have been reluctant to apply for purchase loans.
- After a brief spike in January, the Mortgage Bankers Association Purchase Loan Index in August fell back near where it was in October, essentially the lowest point in decades.
That said, market forces can play a large role in agents’ assessment of their current buyer pipeline, both of which could worsen future prospects for the time being.
Methodological notes: This month’s Inman Intel Index questionnaire was conducted from August 19 to August 30, 2024 and had received over 620 responses as of August 26. The figures used for this article are preliminary and subject to revision. The entire Inman reader community was invited to participate, and a rotating, random selection of community members were asked to participate by email.. Users responded to a series of questions related to their self-described corner of the real estate industry – including real estate agents, brokerage leaders, lenders and proptech entrepreneurs. The results reflect the views of the involved Inman community, which do not always reflect those of the wider real estate industry. This questionnaire is carried out monthly.
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