REALTORS® See Uptick in Housing Markets

February 10, 2015

An improving job market, low mortgage rates, and recent moves by the government to loosen up mortgage credit is fueling increased optimism among REALTORS®. In particular, real estate professionals are growing more confident about the housing market’s outlook for the next six months, according to the December 2014 REALTORS® Confidence Index, a survey of more than 4,000 REALTORS® about local and market conditions that is released by the National Association of REALTORS®.

The single-family market saw some of the most improvement, with the six-month outlook increasing to 67 in December (from 60 the prior month). Any number above 50 indicates that respondents have a “strong” outlook than “weak” outlook.

The states with the strongest outlook in the single-family market are Texas, Colorado, and North Dakota.

“Falling oil prices means more money into consumers’ pockets, which along with reasonable interest rates, should be positive for the housing outlook in 2015,” Lawrence Yun, NAR’s chief economist, notes in the report. “However, REALTORS® in states with greater dependence on the oil and gas industry cautioned about the effect of continued drop in oil prices on employment and its impact on housing.”

While REALTORS® are showing more confidence in the single-family market, they tended to be less optimistic about the townhome and condo market, which remained below 50 in December on the index.

“REALTORS® continued to report that financing for condominiums is difficult to obtain because of FHA financing eligibility regulations,” the report notes.

REALTORS® are reporting an overall increase in buyer and seller traffic in many local markets in December compared to the previous month, although weaker compared to year ago levels. “Although supply has been improving, demand continued to outstrip supply,” the report notes.

Many real estate professionals reported that home prices continued to rise modestly in December in their markets. About 47 percent of REALTORS® surveyed reported that the price of their “average home transaction” was higher in December compared to a year ago. The median home price of an existing-home in November 2014 was $205,300, according to NAR housing data.

“A moderation in home price growth is a boon for homebuyers, especially first-time buyers,” Yun notes in the report. “REALTORS® have reported about the lack of ‘affordable’ housing in many areas as home prices rebounded starting in 2012.”

The majority of the REALTORS® surveyed expected home prices to rise modestly in the next 12 months by about 3.2 percent. States that are the most upbeat with price expectations – confident about a 4 to 5 percent rise this year – are the District of Columbia, Florida, and Nevada.

“REALTORS® expect more modest growth along the Midwest region from North Dakota to Oklahoma, possibly on the account of the concerns about the effect of falling oil prices,” the report notes.

Source: REALTORS® Confidence Index (December 2014) and “Most REALTORS® Have Optimistic Housing Outlook in Next 6 Months,” National Association of REALTORS® Economists’ Outlook blog (Feb. 9, 2015)