realtors® confidence index: august 2014

8/11/2019 REALTORS Confidence Index: August 2014

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REALTORS CONFIDENCE INDEXReport on the August 2014 Survey

NATIONAL ASSOCIATION OF REALTORS

Research Department

Lawrence Yun, Senior Vice President and Chief Economist


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TheREALTORS Confidence Index(RCI) Report provides monthly information aboutmarket conditions and expectations, buyer/seller traffic, price trends, buyer profiles, and issuesaffecting real estate based on data collected in a monthly survey of REALTORS. The August2014 report is based on the responses of 3,360 REALTORS about their transactions in August2014.1 Responses were received from September 1 -10, 2014. Questions about the

characteristics of the buyer and the sale are based on the REALTORS last transaction forAugust, which on a combined basis are viewed to be representative of the sales for the month.All real estate is local: conditions in specific markets may vary from the overall national trendspresented in this report.

The Report also contains commentaries by the Research Department on recent economicdata releases and policies affecting housing.

Jed Smith, Managing Director, Quantitative Research

Gay Cororaton, Research Economist

Thomas J. Doyle, Director , Marketing and Communications

Meredith Dunn, Research Communications Manager

1 The survey was sent to 50,000 REALTORS who were selected through simple random sampling. Toincrease the response rate, the survey is also sent to respondents in the previous three surveys and who providedtheir email addresses. The number of responses to a specific question varies because the question is not applicableto the respondent or because of non-response. To encourage survey participation, eight REALTORS are selectedthrough simple random sampling to receive a gift card.


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Table of Contents

SUMMARY .................................................................................................................................................. 1

I. Market Conditions .................................................................................................................................... 2

REALTORS Confidence is Unchanged in August 2014 ...................................................................... 2

REALTORS Buyer Traffic Index Is Unchanged in August 2014 ......................................................... 5

66 Percent of REALTORS Report Rising Home Prices in August 2014 ............................................ 5

REALTORS Expect Prices to Increase Modestly in the Next 12 Months ............................................ 7

Properties Typically Sold Within 53 Days in August 2014 ...................................................................... 8

II. Buyer and Seller Characteristics .............................................................................................................. 9

Sales to First Time Buyers: 29 Percent of Sales ...................................................................................... 9

Cash Sales: 23 Percent of Sales ............................................................................................................ 11

Most First time Home Buyers Pay Low Down Payment ........................................................................ 12

Sales for Investment Purposes: 12 Percent of Sales ............................................................................... 12

Second-home Buyers and Relocation Sales: Still Weak ......................................................................... 13

Distressed Sales: 8 Percent of Sales ........................................................................................................ 14

International Transactions: 2 Percent of Residential Market ................................................................. 16

Rising Rents for Residential Properties .................................................................................................. 17

III. Current Issues ........................................................................................................................................ 17

Reasons For Not Closing A Sale ............................................................................................................ 17

Tight Credit Conditions and Slow Lending Process ............................................................................... 18

IV. Commentaries by NAR Research ......................................................................................................... 19

Consumer Confidence: Highest In Nearly Seven Years ......................................................................... 19

Foot Traffic Diffusion Index Continues to Increase in August............................................................... 21

A Look at Existing Home Sales Market Over the Past Decade .............................................................. 22


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SUMMARY

REALTORS assessments of real estate market conditions in 2014 and their outlookfor the next six months were essentially unchanged from the July 2014 survey. Broadly, theconfidence and buyer indexes indicate that there are more REALTORS who view their local

market as strong than those who view their local markets as weak. There were reports that insome areas, market activity fell in August, which respondents attributed to seasonal factors suchas school openings. Supply constraints were reported to be easing in more states than reportedpreviously ( in AZ, CA, DE, FL, GA, IN, ID , MD, ME, MI, MN, NC, NV, NY, TX, VA, WI),although inventory was still generally tight as reflected in the supply index that is still trackingbelow 50. Supply was reported to be tight especially for lower and middle-priced homes,given fewer listings for distressed properties and with the strong price appreciation since 2012that has made homes less affordable. Purchases by first-time buyers accounted for about thesame share of the market as buyers continued to face difficulty in obtaining loans under toughercredit standards. With rising home prices, the share of purchases for investment purposesdropped significantly in August. With investors typically paying cash, the share of cash sales to

total sales also dropped. With slightly improving inventory, properties stayed on the marketlonger, and REALTORS expected a modest price increase in the coming 12 months.

August 2014 REALTORS Confidence Index Survey Highlights

August

2014

July

2014

August 2013

RCICurrent Conditions: Single Family Sales /1 60 60 69

RCI- 6 Month Outlook: Single Family Sales /1 61 60 66

RCIBuyer Traffic Index /1 55 55 62

RCI-Seller Traffic Index /1 44 44 44

First-time Buyers, as Percent of Sales (%) 29 29 28

Cash Sales, as Percent of Sales (%) 23 29 32

Sales to Investors, as Percent of Sales (%) 12 16 17

Distressed Sales, as Percent of Sales (%) 8 9 12

Median Days on Market 53 48 43

Median Expected price growth in next 12 months (%) 3.5 3.4 4.2

/1 An index of 50 indicates a balance of respondents having weak(index=0) and strong (index=100)expectations. An index above 50 means there are more respondents with strong than weak expectations. Theindex is not adjusted for seasonality effects.


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I. Market Conditions

REALTORS Confidence is Unchanged in August 2014

Confidence about current market conditions was unchanged in August 2014 compared to

July 2014 . In the single family market, theREALTORS Confidence Index - CurrentConditionsfor single family homes stayed at 60 (60 in July) which indicates that broadly, thereare more respondents who view their markets as strong compared to those who view them as

weak. 2There were reports that in some areas market activity fell in August, whichrespondents attributed to seasonal factors such as the school opening. The indexes fortownhouses/duplexes registered and condominiums continued to be at below 50. REALTORShave reported that the condominium market has not recovered as strongly as single family homesbecause of FHA financing and occupancy regulations .

Confidence about the outlook for the next six months appeared to be slightly better inAugust compared to July. The six-month Outlook Index for single family homes increased to 61(60 in July). The indexes for townhouses and condominiums were essentially unchanged atbelow 50. Difficulties in obtaining mortgages, tight inventory especially for affordable homes,and weak job creation especially in the Midwest states (WI, IN) were the main concerns reportedby REALTORS. In some areas, the uncertainty about flood insurance rates, and the increase inproperty taxes were also cited as adversely affecting sales. FHA condominium

accreditation/financing regulations continued to adversely impact condominium sales.

2 An index of 50 delineates moderate conditions and indicates a balance of respondents havingweak(index=0) and strong (index=100) expectations or all respondents having moderate (=50) expectations.The index is calculated as a weighted average using the share of respondents for each index as weights. The index isnot adjusted for seasonality effects.

60

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REALTORS Confidence Index - Current Conditions--

as of Aug 2014 RCI Survey(50="Moderate" Conditions)

SF Townhouse Condo


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The maps show by state the outlook of respondents based on the June-August 2014surveys. An index greater than 50 indicates that the number of respondents who had a strongoutlook outnumbered the respondents who had a weak outlook for the next 12 months. Thehigher the index, the more respondents there are with strong outlook who outnumber those

who view market conditions to be weak in the next 12 months.

REALTORS(c) Confidence Index: Outlook in Next Six Months for Single-Family Homes

Based on June 2014-August 2014 RCI Surveys

61

45

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REALTORS Confidence Index - Six Month Outlook--

as of Aug 2014 RCI Survey

(50="Moderate" Outlook)

SF Townhouse Condo


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REALTORS(c) Confidence Index: Outlook in Next Six Months for Townhouses


REALTORS(c) Confidence Index: Outlook in Next Six Months for Condominiums



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REALTORS Buyer Traffic Index Is Unchanged in August 2014

The Buyer Traffic Index which captures the assessment of REALTORS about buyerstraffic in their markets remained at 55 in August (same as in July). An index above 50 indicates

that more REALTOR respondents viewed traffic conditions as strong compared to those whoviewed conditions as weak.

In some areas, there were reports of slower activity in August compared to that in thespring, which respondents attributed to the seasonal slack before the school opening.Respondents from more states reported an improvement in supply (in AZ, CA, DE, FL, GA, IN,ID , MD, ME, MI, MN, NC, NV, NY, TX, VA, WI), but inventory is still generally tight: theSeller Traffic Index is still below 50 and essentially stayed flat at 44(same as in July)3.REALTORS reported that supply was tight especially for lower and middle-priced homes.With rising prices, there are fewer foreclosed properties and short sales on the market.REALTORS also continued to report about the long process of banks in approving for short

sales. Potential sellers are also hesitant to sell because of concerns that they will not find anaffordable replacement home with adequate mortgage financing in a tight market.

NAR also tracks foot traffic using Sentrilock, LLC data. Lockboxes made by SentriLock,LLC are used in roughly a third of home showings across the nation. For the second consecutivemonth this index rose to 57 in August (54.8 in July), which indicates that more than half of theroughly 200 markets tracked in this panel reported an increase in foot traffic ( See Section IVCommentaries for a discussion of this index.)

66 Percent of REALTORS Report Rising Home Prices in August 2014

Home prices continued to generally increase. Approximately 66 percent of REALTORrespondents reported that the price of their averagehome transaction is higher today comparedto a year ago. About 22 percent reported constant prices, and 12 percent reported lower prices.Rising prices are an indication that inventory is still generally tight in many areas. Fewer listingsof foreclosed properties and short sales have also bolstered prices. For homeowners, risingprices will move those in negative equity into positive territory. As of July 2014, the medianhome price of an exisiting home was $222,900 , just about 4 percent shy of the peak price of$230,400 in July 2006 prior to the housing downturn. For buyers, rising home prices haveeroded home affordability, but with mortage rates at historic lows, home prices are still at their

most affordable in decades .

3 An index of 50 delineates moderate conditions and indicates a balance of respondents having

weak(index=0) and strong (index=100) expectations or all respondents having moderate (=50) expectations.The index is calculated as a weighted average using the share of respondents for each index as weights. The index isnot adjusted for seasonality effects.


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With inventory still generally tight, approximately 12 percent of reported sales were at anet premium compared to the original listing price (14 percent in July 2014). In mid-2013, about20 percent of REALTOR respondents reported selling properties at a premium. About 70percent of properties sold at a dicount compared to the listing price, and about half percentreported selling at a discount of less than 10 percent.

66%

12%

22%

0%

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Percentage of REALTOR Respondents Reporting Price

Change from a Year Ago--as of Aug 2014 RCI Survey

Higher Lower Unchanged

70%

18%

12%

0%

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40%

60%

80%

100%

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Percentage Distribution of the Price Discount /Premium

On the Original Listing Price of Properties Sold byREALTORS --as of Aug 2014 RCI Survey

Sold at Net discount Sold at Original Listing Price Sold at a Net premium


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REALTORS Expect Prices to Increase Modestly in the Next 12 Months

REALTORS responding to the survey expected home prices to increase modestly inthe next 12 months, with the median expected price increase at 3.5 percent4. The expectedprice change is modest compared to the strong price growth in 2012-2013. Local conditions vary,but concerns about how borrowers are finding it difficult to obtain a mortgage and a continuedweak job recovery appear to be underpinning the modest price expectation.

The map shows the median expected price change in the next 12 months by the state ofREALTOR respondents in the June August 2014 surveys. Respondents from Florida,Texas, and Hawaii expected prices to increase in the range of 5 to 6 percent. Tight inventory andthe strong growth in Texas metro areas may account for the optimistic outlook. Expected pricegrowth is more modest in other states.

4 The median expected price change is the value such that 50 percent of respondents expect prices to changeabove this value and 50 percent of respondents expect prices to change below this value. A median expected pricechange is computed for each state based on the respondents for that state. The graph shows the range of these statemedian expected price change. To increase sample size, the data is averaged from the last three survey months.

1.6%

2.7%

2.1%

4.3%

11.6%

21.7%

25.7%

17.8%

6.9%

3.1%

1.3%

0.5%

0.3%0.3%

0.2%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

net discount of greater than 23%

net discount of 20-23%





net discount of greater than 0 to 3 %

0% net discount or net premium

net premium of greater than 0 to 3%

net premium of 4-7%

net premium 8-11%

net premium 12-15%

net premium of 16-19%net premium of 20-23%

net premium of greater than 23%

Percentage Distribution of Net discount or Net Premium From the

Listing Price of Sales Reported By REALTORS--

Aug 2014 RCI Survey


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Median Expected Price Change of REALTORS in Next 12 Months, By State


Properties Typically Sold Within 53 Days in August 2014

Properties typically sold within 53 days in August (48 days in July)5. With slightlyhigher inventory compared to last year, properties stayed on the market longer compared to ayear ago (43 days). Short sales were on the market for the longest, at 135 days (93 days in July),and foreclosed properties were on market at 53 days (58 days in July). Non-distressedproperties were on the market at 52 days (56 days in July). Conditions varied across areas.Approximately 40 percent of respondents reported that properties were on the market for lessthan a month when sold, and about 14 percent were on the market for more than six months.

5 This is the median days on the market. A median of say 30 days means that half of the properties were onthe market for less than 30 days and another half of properties were on the market for more than 30 days.


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II. Buyer and Seller Characteristics

Sales to First Time Buyers: 29 Percent of Sales

Approximately 29 percent of REALTORS reported that their last transaction inAugust was by a first time home buyer (29 percent in July )6. Access to financing remains a

6 First time buyers accounted for about 38percent of all homebuyers based on data from NARs 2013Profile

of Home Buyers and Sellers.NARs survey of buyers and sellers in general does not capture investor purchases but

does cover both existing and new home sales.

0

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Median Days on Market of Sales Reported By

REALTORS--as of Aug 2014 RCI Survey

All Foreclosed Short Sales Not distressed

Source: NAR, RCI Survey

All: 53 Foreclosed: 53 Shortsale: 135 Not distressed: 52

37%

17%13%

10%5% 4% 5% 4% 5%

0%

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50%

=12

mo

Distribution of Sales Reported by REALTORS by Time On

Market--Aug 2014 RCI Survey

201308 201407 201408


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major issue for most buyers, specifically in relation to meeting the credit score anddownpayment requirements to be granted a mortgage (which many REALTORS cited as 740+and 20 percent down). Also, strong home price appreciation has outpaced wage growth andhave made homes less affordable. The effective increases in the FHA mortgage insurancepremiums were also reported to be putting an additional strain on buyers. REALTORS

commented on the difficulty of obtaining FHA financing for condominiums, which are typicallythe starter homes for first-time buyers.

Most first-time buyers are in the 35 years and under age group. Among the non-first timehome buyers, 54 percent were in the 35 to 55 age group, while 33 percent were in the 56+ age

group. Those in the 35-55 age group are likely moving for family-related reasons (e.g, tradingup, new neighborhood, etc.) , while those in the 56+ age group are likely moving for reasonsrelated to retirement (e.g, trading down, moving to an adult community or another state).

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First Time Buyers as Percent of Market*--


*Based on most recent sale of the month of REALTOR respondents.

12%

66%54%

29%33%

4%

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60%

80%

100%

0-Not FT Home Buyer 1-FT Home Buyer

Age Distribution of Home Buyers Based on Sales

Reported by REALTOR Respondents in August 2014

RCI Survey*

35 and under 35 to 55 56+

* Based on the most recent sale of the month of REALTOR respondents.


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Cash Sales: 23 Percent of Sales

Approximately 23 percent of REALTOR respondents reported that their lasttransaction was a cash sale, a significant drop from the 29 percent of respondents who reportedcash sales in July. 7 The drop in cash sales appears to be tied to the decline in purchases for

investment purposes (sales to investors) which fell to 12 percent in August 2014. Foreign clients,and buyers of second homes and distressed properties are more likely to pay cash than firsttimehome buyers. Close to a third of sales to investors and international clients are cash sales. Mostfirst-time homebuyers use mortgage financing.

7 TheRCISurvey asks about the most recent sale for the month.

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Cash Sales as Percent of Market*--


* Based on most recent sale of the month of REALTOR respondents.

7%

64%

52%

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70%

FTHBuyer Investor Second home Relocation International Distressed Sale

Percent of Sales Reported by REALTORS That are All-Cash,

by Type of Buyer-- July 2014 RCI Survey


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Most First time Home Buyers Pay Low Down Payment

The majority of first-time home buyers who are able to obtain mortgage financing stillmake a low downpayment. Among first-time buyers that REALTORS reported usedmortgage financing in the months of JuneAugust 2014, about 66 percent made a downpayment

under 6 percent

8

. Still, this is a decline from the 74 percent figure in 2009. Higher downpayments , typically at 20 percent, may be required to compensate for the weak aspects of aborrowers credit profile. This presents a barrier to the purchase of a home since the typicalrenters savings may be substantially less than the downpayment and closing costs. Borrowerswho obtained a mortgage with a low downpayment are likely those with relatively good creditscores or those who have saved enough to avoid paying the monthly mortgage insurancepremium payments.

Sales for Investment Purposes: 12 Percent of Sales

Approximately 12 percent of REALTOR respondents reported that their last sale wasfor investment purposes (16 percent in July). Since January this year , the share of sales forinvestment purposes appears to be on the decline from the historical average of about 20 percentin recent years. Rising home prices are cutting into profits even if rents continue to rise.

8Based on the REALTOR respondents most recent sales for the survey months, which altogether are viewed to

be a representative sample of all sales for these months.

74% 66%

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Percent of First-time Buyers Obtaining a Mortgage Who

Paid Downpayment of 6% or Less*--as of Aug 2014

Source: NAR RCI Surveys. Computations are based on the most recent sale for

the month reported by REALTOR respondents in the last three surveys.


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Second-home Buyers and Relocation Sales

Purchases for vacation/second home purposes and for job/business relocation purposeshave been reported as relatively constant since 2010. About 16 percent reported a sale forrelocation due to a job change or business move purposes , and 9 percent reported a sale to avacation home buyer. REALTORS reported that the economy has not improved enough tosupport a strong demand from buyers for relocation and second /vacation home purposes.

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Sales to Investors as Percent of Market*--


*Purchase of property for investment purposes.* Based on most recent sale of the month

of REALTOR respondents.

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Relocation Buyers as Percent of Market*--


*Based on most recent sale of the month of REALTOR res ondents.


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Distressed Sales: 8 Percent of Sales

With rising home values and fewer foreclosures, sales of distressed sales have fallensharply compared to the magnitude in the wake of the Great Recession. In August, distressedsales accounted for 8 percent of sales reported by REALTORS: 6 percent of reported saleswere foreclosed properties, and about 2 percent were short sales9. In judicial states such as CT,DE, IL, and SD, more distressed properties are coming into the market.

Foreclosed property sold at a 14 percent average discount to market (20 percent in July),while short sales sold at a 10 percent average discount (14 percent in July).10 The discount

varied by house condition. For the past 12 months, properties in above average conditionwere discounted by an average of 9-13 percent, while properties in below average conditionwere discounted at an average of 14-20 percent.

9 The survey asks respondents to report on the characteristics of the most recent sale for the month.10 The estimation of the level of discount is based on an estimate of what the property would have sold for if ithad not been distressed (possibly in better condition, absent any taint of being distressed).

9%

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Second-Home Buyers as Percent of Market*--


*Based on most recent sale of the month of REALTOR respondents.


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0%

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Distressed Sales, As Percent of Sales Reported by

REALTORS*-- as of Aug 2014 RCI Survey

Foreclosed Short Sale

Aug 2014: Foreclosed: 6% Shortsale: 2%


14

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Mean Percentage Price Discount of

Distressed Sales Reported by REALTORS*(in %)--as of Aug 2014 RCI Survey

Foreclosed Shortsale

%

%



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International Transactions: 2 Percent of Residential Market

Approximately 2 percent of REALTOR respondents reporting on their last sale was ofa purchase by a foreigner not residing in the U.S. International buyers frequently pay cash aswell as purchase properties above the median price of the domestic buyer. For the 12 monthsending March 2014, NAR estimated that sales to non-resident international clients andforeigners who are temporarily residing in the U.S. amounted to $ 92.2 billion, as reported in the2014 Profile of International Homebuying Activity.11

11http://www.realtor.org/topics/profile-of-international-home-buying-activity

1314

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9 10

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0

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Above average Average Below average

Mean Percent Price Discount by Property Condition

of Distressed Sales Reported by REALTORS --

Unweighted Average for Sep 2013 - Aug 2014

Foreclosed Short sale

2.3%

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1.0%

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Sales to International Clients as Percent of Market*--


*Based on most recent sale of the month of REALTOR res ondents.


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Rising Rents for Residential Properties

Based on rent trends, the demand for rentals remains strong. Among thoseREALTORS involved in a rental, 54 percent reported higher residential rents compared to rentlevels 12 months ago. About 21 percent of REALTORS reported conducting an apartment

rental, and about 3 percent reported a commercial rental transaction. To note, although rentshave been rising, house prices have increased at a faster clip since 2012 which further drives upthe demand for rental units.

III. Current Issues

Reasons For Not Closing A Sale

Tight supply and the difficulty in accessing credit were often cited as deterrents to homebuying. About 18 percent reported having clients who could not obtain financing in August2014. Appraisal issues were reported as accounting for 4 percent of failures to close a sale.About 11 percent of REALTORS who did not close a sale reported that the buyer and sellercould not agree on the price, and 8 percent reported the buyer lost the bidding competition.Other reasons include responses that the buyer is still searching or that the transaction is in theescrow period or a closing is underway.

54%

-5%

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Percent of REALTOR Respondents Reporting Rising Rent

Levels Compared to 12 Months Ago--



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Tight Credit Conditions and Slow Lending Process

Credit continues to mostly flow to those with high credit scores. About 50 percent ofsurvey respondents who provided credit score information reported FICO credit scores of 740and above. Only about 2 percent of REALTORS reported a purchase by a buyer with creditscore of less than 620. In 1999-2004, about 37 percent of Fannie Maes acquisition and 35percent of Freddie Macs acquisitions had credit score of 700 or less

12.

12http://www.urban.org/UploadedPDF/413206-Housing-Finance-At-A-Glance-A-Monthly-Chartbook-

August2014.pdf
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IV. Commentaries by NAR Research

Consumer Confidence: Highest In Nearly Seven Years

Lawrence Yun, Chief Economist

o Consumers are feeling much better and more confident in recent months: the consumerconfidence index in August rose to the highest mark in nearly seven years. Such a trendcould lead to improvement in home sales and boost demand for retail commercial spaces.

o

Numerically, the index hit 92.4. The last time it was that high was right before the financialmarket crisis in October 2007 when the unemployment rate was very low at 4.7 percent(versus todays unemployment rate of 6.1 percent). The index, however, is still shy of 100,where at least half of Americans would be saying that the economy is generally moving inthe right direction.

o For home buying, it is not only about financial capacity and mortgage rates. Confidence alsomatters. People need to feel they will be better off in the future in order to make a majorexpenditure. The index that captures only the future expectations was 90.9, also nearing thecrucial 100 marker.

o The very strong, high stock market has driven total household net worth to an all-timehigh. However, only about 10 percent of Americans have meaningful exposure to the stock

market. Therefore the stock market is not the best gauge of economic sentiments of themiddle class. In contrast, the consumer confidence index covers a whole swath of peopleacross all income spectrums and therefore this index is much better in assessing the mood ofnormal Americans.

o Confidence can change the world. In fact, when the Portuguese first circumnavigated thelower tip of Africa on their way to Asia for spices, the very stormy area with constant violentsea waves near the tip was given the scary name of Cape of Bad Storms. The King ofPortugal immediately changed the name to Cape of Good Hopein order to encourage more

11%

15%

23%

50%

0%

20%

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60%

80%

100%

RCI-Fe

b'12

RCI-Apr

'12

RCI-Jun

'12

RCI-Aug

'12

RCI-0ct

'12

RCI-Dec

'12

RCI-Fe

b'13

RCI-Apr

'13

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'13

RCI-Aug

'13

RCI_Oct

'13

RCI_Dec

'13

RCI_Fe

b'14

RCI_Apr

'14

RCI_Jun

'14

RCI_Aug

'14

Distribution of FICO Scores Reported by REALTORS--


lt 620 620 - 659 660-699 700-739 740+

Source: NAR RCI Surveys


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sailors to make the trip. Portugal and subsequently Spain rose in economic power while theold trade route cities of Venice and Genoa lost economic power.
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Foot Traffic Diffusion Index Continues to Increase in AugustKen Fears, Director, Regional Economics and Housing Finance Policy

Foot traffic continued its upward climb for the second consecutive month in August. The Augustreading as measured by NARs diffusion index rose 2.2 points to 57.0. This reading suggests a

moderate improvement over the same period last year. The gains in the index partially reflectthis summers low mortgage rates and an adjustment by consumers to a higher rate environment,but also the sharp decline in traffic last summer in the wake of the 1%+ increase in mortgagerates that followed comments by then Fed Chairman Bernanke.

Every month SentriLock, LLC. provides NAR Research with data on the number of propertiesshown by a REALTOR. Lockboxes made by SentriLock, LLC. are used in roughly a third ofhome showings across the nation. Foot traffic has a strong correlation with future contracts andhome sales, so it can be viewed as a peek ahead at sales trends two to three months into thefuture. For the month of August, the diffusion index for foot traffic rose 2.2 points to 57.0, thehighest level since July of last year when it reached 59.0.

The index is above the 50 mark which indicates that more than half of the roughly 200 markets

in this panel had stronger foot traffic in August of 2014 than the same month a year earlier. Thisreading does not suggest how much of a change in traffic there was, just that more than half ofthe markets tracked experienced more foot traffic in August of 2014 than 12 months earlier.

Two consecutive improvements in the foot traffic index are a robust indicator of relative strengthin the 2ndhalf of 2014. However, tight mortgage credit and low inventories at the entry-levelportion of the market remain a headwind to sales. In the absence of a resurgence of distressedinventory or nascent traditional sellers, inventories may ease relative to sustained demandthrough the fall as the typical seasonal pattern takes hold.


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A Look at Existing Home Sales Market Over the Past DecadeMichael Hyman, Research Data Specialist

Every month NAR produces existing home sales, median sales price and inventory figures. Thereporting of this data is based on homes sold the previous month and the data is explained in

comparison to the same month a year ago. We also provide a perspective of the market relativeto last month, adjusting for seasonal factors, and comment on the potential direction of thehousing market.The data below shows what our current month data looks like in comparison to the last ten Julysand how that might compare to the ten year July average, which is an average of the data from

the past ten Julys.o Regionally, one of the first things that sticks out is that 2005 seems to be the best year of

sales and 2010 seems to be the lowest point of sales activity. The South has been thestrongest region in terms of transactions and the Northeast has had the least amount of sales.The difference in sales is largely a function of population differences in the regions.

o The median price year-over-year percentage change shows the West region went through the

largest fluctuation, having the highest and the lowest price growth at different points in theten year cycle. The West experienced its worst price percentage decline in 2009 and its bestprice increase in 2012.

o Inventory of homes for sale in the U.S. peaked in 2007, with its lowest point seen just lastyear. In 2010 the U.S. had the slowest pace of homes sold relative to inventory, with monthssupply at 11.9. The ten year July average months supply is 7.2. In July 2014 we stand at 5.5months supply, somewhat below a typical July.

o Julys median price is higher than the ten year July average median price for the U.S. and all

four regions. Regionally, while the Northeast and the West have recently experienced lowerthan the ten year average sales, the Midwest and the South both showed modestly highersales. Total homes sold in the US for July 2014 is slightly higher than the ten year average,

which is a good sign for housing recovery.


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realtors® confidence index: august 2014

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