RISMedia’s latest Broker Confidence Index (BCI) is offering a potentially very positive preview of 2024’s spring and summer market, with a bigger than usual jump in broker sentiment at the beginning of the traditional busy season for real estate, which could foreshadow resurgent sales.
Jumping a full point from seven to eight in April, brokers are reporting strong demand, specifically with an increase in showing activity and buyer inquiries, along with desperately needed additions to inventory.
While the BCI has tracked larger than average jumps in confidence every year in April or March, this is the biggest spring surge since the index was launched in late 2021, and could portend a resilient market despite headwinds.
The increase comes ahead of hard data on April’s home sales, as well as amid stubbornly high mortgage rates and no sign of imminent cuts by the Fed.
Data on sales for March was mixed, as the National Association of REALTORS® (NAR) reported existing home sales fell 4.3% in March (though that was stratified across regions), while the U.S. Census Bureau reported a significant 8.8% increase in new home sales for that month.
This big BCI increase also is the first to track a full month of broker’s reaction to the NAR settlement, which was announced on March 15. The fact that major changes to real estate, including removing offers of compensation from the MLS, did not appear to dampen broker’s spirits is another good sign of the industry.
In fact, nearly all respondents focused on those fundamental aspects of the market as far as what was qualitatively affecting confidence—things like rates, demand and inventory, although about 20% mentioned more transitory factors, including election politics and the upcoming NAR settlement changes.
Buyer agency blues
While the NAR settlement might not be the number one issue on broker’s minds right now, the changes are right around the corner, with compensation removed from the MLS and buyer contracts becoming mandatory by the middle of August.
While some regions, companies and associations have already implemented many of the changes required by NAR’s settlement, it remains unclear just how prepared the industry at large is to adjust. This month, RISMedia surveyed brokers on how often their agents used buyer agreements over the past year or so, and where they got their agreements.
The vast majority of brokers (80%) said their agents only sometimes or rarely used buyer agreements, with the rest saying they never used them.
This leaves a lot of ground to make up, as a huge number of agents will have to familiarize themselves with buyer agreements in a short amount of time, and integrate them into their businesses and relationships.
Where brokers get their buyer agency agreement, or where they will be looking for one before August is also extremely important, as the NAR changes intersect with state laws and regulations. Several companies have already put out their own updated buyer agency contracts.
Almost two-thirds (62%) of brokers said they made their buyer agency agreement in-house, or planned to. That means the time and resource commitment needed to update or create those agreements will fall on them, rather than outsourced to an agency or association.
Nearly all other respondents (37%) said they were getting their agreement from a state association.
