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Martin Luther King, Jr. Day 2017

Fri, 01/13/2017 - 14:54

Martin Luther King, Jr. Day is observed on the third Monday of January and marks the birthday of Rev. Dr. Martin Luther King, Jr. This holiday is also recognized as a day of service, and is an opportunity to serve your community. Based on data from the 2016 Member Profile and 2016 Firm Profile we can see how REALTORS® are volunteering in their community.

  • Seventy-one percent of all REALTORS® volunteer in their community, and the typical REALTOR® who volunteers is 52 years old.
  • Fifty-nine percent of REALTORS® aged 50 and older volunteer in their community.
  • Sixty-four percent of the REALTORS® volunteering are females, and 36 percent are males.
  • Fifteen percent of volunteers were fluent in a language other than English.
  • REALTORS® who volunteered typically had previous careers in management, business, or financial field were more likely than any other previous career to volunteer (16 percent).
  • Among firms there is encouragement of REALTORS® to volunteer.  Eighty-two percent encourage volunteering in the local community, 48 percent encourage volunteering with their local association, 28 percent encourage volunteering with their state association of REALTORS®, and 19 percent with the National Association of REALTORS®.


Find more information on Martin Luther King, Jr. Day and opportunities to volunteer in your area at:

For more highlights on REALTORS® view the Martin Luther King, Jr. Day infographic  2016 Member Profile and 2016 Firm Profile.

NAR Commercial Members Optimistic About Business Creation Throughout 2016

Wed, 01/11/2017 - 11:28

By the nature of the profession, commercial real estate agents have a unique perspective on business creation as they play a key role in helping companies lease or own office space and commercial facilities. For that reason, the NAR Research team has surveyed its commercial membership each month from August to December 2016 to track whether businesses were opening or closing in their communities.

In each 30-day period, NAR commercial members were asked their perspective on three key questions related to business in their local markets, namely had they seen:

  1. An increase of businesses opening in local communities in the last 30 days
  2. An increase of businesses closing in local communities in the last 30 days
  3. Net businesses opening and closing in local communities in the last 30 days

With regards to businesses opening, NAR commercial members were optimistic throughout the second half of 2016. Each month, more commercial members cited that they had seen an increase in businesses opening. In September, commercial members saw the most businesses openings at 50 percent, compared to 42 percent that said they had not seen an increase of businesses opening in their communities. August and December were also good months, where commercial members reported that they had seen an increase of businesses opening at 49 percent. Around the holiday season, November was the slowest month where only 43 percent of commercial members cited that they had seen an increase in businesses opening.

From August to December, 65 percent of commercial members cited that retail industries were opening in their communities, followed by the food and beverage industry at 61 percent, and health, medical, and dental industries at 41 percent.

When NAR commercial members were asked the second question—whether they saw an increase in businesses closing in their communities—the share that cited that there was not an increase actually grew over the five-month period. Specifically, in August 64 percent said that there was not an increase in businesses closing, compared to December where 73 percent cited that there was not an increase in closings in their communities. Commercial real estate agents were thus optimistic about business creation in their areas.

When we asked commercial members what the net ratio of businesses opening to closings in the five-month period, roughly half of commercial agents were said more businesses were opening (50 percent in August and 53 percent in December). Only a quarter said that openings to closing remained the same each month (25 percent in August and 28 percent in December).

How Much Will Your Monthly Payment Change?

Tue, 01/10/2017 - 14:32

Mortgage rates have been rising sharply over the past couple of months. The 30-year fixed-rate mortgage was 4.2 percent in December, the highest of 2015 and 2016, and it appears to stay above 4 percent for a long while. Mortgage rates are still historically low, but crossing over from the 3 percent range to 4 percent range raises worries to potential homebuyers. But, should they be worried? How much can this rise of mortgage rates change their monthly payment? How does this change of monthly payments vary by county?

We calculated the monthly payment by county based on the mortgage rate prevalent a couple of months ago (3.5 percent), the rate as of early January (4.2 percent) and a higher rate likely to be seen within the next two years (5.0 percent).

Nationwide, it is estimated that the rise of mortgage rates from 3.5 to 4.2 percent increased the monthly payment by $75 while a rise from 4.2 to 5.0 percent will increase the monthly payments by $90[1].

But the effect depends on the location. At the high end, San Francisco homebuyers have seen a nearly $375 increase in monthly payments so far, and if rates were even higher now, financing the same-priced home would cost an extra $450 per month.  At the low end, in Cochrane County, TX, home buyers are paying an extra $13 per month on account of the mortgage rate rise since November, and they could see an extra $16 per month as rates rise to 5 percent. At this end of the spectrum, the change in monthly payments seems much more manageable.

However, these examples only use the current price of homes to see the difference.  In the years ahead, NAR expects that the 30 year fixed-rate will increase to 4.4 percent in 2017 and 4.8 percent in 2018 while home prices are expected to rise 3.9 and 3.2 percent, accordingly. Rising prices in addition to rising mortgage rates will push the monthly cost of housing up even higher for new homebuyers. Existing homeowners will have the same monthly payment for those who took out fixed rate mortgage.

Select a County from the dropdown and see how much monthly payments change over the different mortgage rates:

Nationwide, it looks like monthly mortgage payment will be affected mostly in the following counties:

Data by State

Data by Price



[1] The U.S. median home value matches the county prices calculations. For comparisons purposes, the calculated median home value reflects all homes while NAR’s U.S. median price represents home sales. Thus, the calculated price ($207,566) is expected to be lower than NAR’s home value ($239,500). Please see Methodology for more details.

December HOME Survey: Moving Near Family and Hosting Friends

Tue, 01/10/2017 - 11:16

In the Housing Opportunities and Market Experience (HOME) Survey, respondents are asked a series of unique questions each quarter. In the December survey, consumers were asked whether they hosted family and friends at home during the holidays, on weekends, and for regular gathers, as well as whether moving near family was important to them.

Fifty-one percent of all respondents said that they do host family friends four or more times a year, compared to only six percent that hosted once a year. Of those that own their own home, 57 percent said they host four or more times a year. Compared to those that rent a place, only 38 percent said they host four of more times and year and 30 percent said they rarely or never host.

When segmented by location, of those who said they host four or more times a year, 54 percent live in rural areas and 53 percent live in suburban areas. Those that hosted frequently was lower in urban areas at 42 percent. When segmented by income, respondents that said they host four or more times a year increased with income, 64 percent with an income of more than $100,000 a year compared to 43 percent with an income of under $50,000. Those that hosted frequently was nearly the same in all regions, albeit slightly lower in the South.

Seventy-eight percent of all respondents said moving near family is important (45 percent said very important and 33 percent said somewhat important). The importance of moving near family increased with age, from only 36 percent stating very important for those 34 years and under to 57 percent for those 65 years and over. While the importance of moving near family was nearly the same across locations, it was slightly higher in rural areas. Moving near family went down slightly as income went up, from 46 percent with an income under $50,000 a year to 43 percent that have an income of more than $100,000 a year. Moving near family was very important in the Midwest at 47 percent compared to 43 percent in the South. For homeowners, 49 percent said that moving near family was very important compared to only 37 percent of renters.

FHA’s Reduces Fee to Pre-Crisis Level

Mon, 01/09/2017 - 09:58

In a move that signals greater normalization of the housing market, the FHA announced a reduction in its annual insurance premium of 25 basis points. This move would reduce the fee it charges from its 0.85 percent to 0.6 percent. NAR estimated the merit of such a 10 to 25 basis point reduction last spring. On a monthly basis, an FHA borrower who purchases a home at the November median home sale price of $234,900 would save $48 each month or nearly $3,000 over five years.

In the wake of the subprime crisis, private mortgage insurers pulled back from the market and the FHA expanded in a countercyclical role to support the housing market and the greater economy. To offset rising losses on its portfolio, the FHA raised fees and tightened its underwriting. In the spring of 2015, the FHA made its first cut to its then high 1.35 percent premium down to 0.85 percent.

The last FHA premium cut was credited with helping to shore up the FHA’s books and to help restore its capital ratio above the statutory 2.0 percent level.  Lower fees helped FHA to retain better borrowers from refinancing to private mortgage insurers who had re-entered the market, but more importantly it helped to improve affordability allowing many previously sidelined borrowers to qualify for a home purchase.  An analysis by the Federal Reserve Board economists conservatively estimated a 2.0 percent expansion of the purchase mortgage market as a result of the last 50 basis point reduction in the fee or roughly 70,000 additional home purchases annually. Based on the Fed economists’ methodology, this 25 basis point reduction could result in an additional 35,000 buyers entering the market. The change in fees could delay some closings as borrowers jockey for the reduced premium and due to temporary boost in refinances, but the net effect would be greater home sales.

The FHA has once again reduced its premium. This change is important support for entry-level and non-pristine borrowers, particularly as mortgage rates begin to tick upward.  However, this change is also an important signal to the market that the Federal agency has successfully recovered after its critical mission of supporting the housing market during the great depression.

2017: What You Can Look Forward to from NAR Research

Fri, 01/06/2017 - 11:00

The new year has already started off with a bang and NAR’s Research Team has many projects in the works for our members, the media, and the general public related to the housing market. We’ve compiled a little cheat sheet below to help you navigate our resources and keep you up to date with the latest reports and statistical releases.

First, all of our Housing Statistics are released either monthly or quarterly and have a set release date. We post the dates each month on our website to provide consistency and planning predictability for our members. The release dates can be found on the 2017 NAR Statistical News Release Schedule. Included in those dates are the monthly Existing Home Sales and Pending Home Sales releases as well as the quarterly Metropolitan Home Prices and Affordability Index and Commercial Real Estate Report/Forecast.

To help you navigate how to read each statistical release, check out each page’s methodology for the definition of terms and the formulas in each calculation. If you’re not familiar with the current format, most of our housing statistics are released in national and regional medians only. We do not release state, city, or zip-code level data, with the exception of major metropolitan cities in our Metropolitan Median Home Prices and Affordability Index.


If you’re just scanning our resources for the first time, you can browse our NAR Research Resource Guide 2016, which details the research reports we produced last year. You can expect many of the same major reports to be released in 2017, while a few many be bi-annual.

Generally, we release our annual reports in the same quarter each year. Our flagship reports include the NAR Profile of Home Buyers & Sellers—released in the 4th quarter of the year—provides insight into detailed information about the experiences with the home buying and selling transaction. The NAR Home Buyer & Seller Generational Trends—released in the 1st quarter of each year—examines the generational differences of home buyers and sellers. Our Investment and Vacation Home Buyer’s Survey comes out in the 2nd quarter, the Profile of International Activity in U.S. Residential Real Estate in the 3rd quarter of the year, and the Housing Opportunities and Market Experience (HOME) Survey as well as the Business Creation Index (BCI) are released quarterly.


Our economists are always digging into the research and uncovering interesting findings. We release multiple blogs a week on The Economists’ Outlook Blog. Several notable blog topics from last year include:


NAR Research’s Chief Economist Lawrence Yun also is a regular contributor to Forbes online. Popular articles of his include Why Winter Could The Best Season To Buy A Home, The U.S. Cities Whose Housing Markets Are Likely To Outperform And Underperform In 2016, and Why Homeownership Matters. He monitors the housing market and writes about unique developments and emerging trends.

We promote all of our housing statistics and research reports across all social media platforms to help engage our members as well as the general public. We post a variety of content, including videos, articles, and infographics on Facebook. We live tweet and Periscope events on Twitter. Our infographics are accessible in our Pinterest boards. We create a visual story encompassing all news and reports on Instagram.

All this, and much, much more! For questions on our data releases, email You can find additional explanations on our Research and Data FAQ page. All historical reports and data are located in the REALTOR® Store.

Stressed Over Higher Interest Rates?

Thu, 01/05/2017 - 13:35

Mortgage rates have risen since the election of Donald Trump, from 3.5% to the recent 4.2%. Bond investors are perceiving an economic stimulus package to uplift the economy. More business activity, greater commerce, and faster job growth are certainly good news, which thereby also no longer justifies the ultra-low interest rate environment of the past decade. Some Wall Street players could be betting up the bond yields not because of stimulus but for negative factors of a much higher government budget deficit arising out of big tax cuts and increased government spending. Whether from good improved economic prospects or bad budget deficit projections, the rates have gone up and will likely continue to do so over the next two years, spanning the period when the impacts of the stimulus will have been fully felt.

So in the first week of 2017, the borrowing rate on a 30-year fixed rate mortgage averaged 4.2%. Taking a look back, let’s recall how high rates were in the distant past. In the 1970s, they averaged 8.9%; in the 1980s, 12.7%; in the 1990s, 8.1%; and in the first decade of the new century they came in at 6.3%. The in-and-around 4% rate is only a recent phenomenon from the year 2011 to today. Nonetheless, many consumers with a short-term memory, especially among the young, have often witnessed sub-4% rates and the latest rising rates feel financially discomforting and discouraging.

Read, NAR Chief Economist, Lawrence Yun’s full Forbes article here.

Instant Reaction: October Owners’ Gains Forecast

Tue, 12/27/2016 - 09:55

The S&P CoreLogic Case-Shiller National Index shows that U.S. prices of single-family homes continue to rise. The national index in October reaches a new high while it is up 5.6 percent from a year earlier.  But what does this mean for homeowners?

Home prices affect the wealth of homeowners. As the price of housing increases, the wealth of homeowners increases as well. Based on the above increase of home prices, it is estimated that owners’ equity[1] was increased by $351 billion. Thus, it seems that 75 million homeowners gained $4,680 from a year ago.

[1] Home equity is the difference between the value of one’s home and the amount of mortgage debt on the home.

Heating your Home for the Holidays 2016

Thu, 12/22/2016 - 13:44

When deciding on a home to purchase, recent buyers took into consideration a variety of different environmental features. The feature that was most important to buyers was heating and cooling costs. Eighty-four percent of recent buyers found heating and cooling costs to be at least somewhat important when deciding on a home to purchase. Thirty-three percent of buyers found heating and cooling costs to be very important. Using data from the 2016 Profile of Home Buyers and Sellers, we can see which buyers find heating and cooling costs most important.

  • Buyers in the Northeast (35%) and the South (37%) were more likely than other regions to find heating and cooling costs to be very important.
  • Heating and cooling costs were more important to buyers who purchased newer homes.
  • Only twenty-nine percent of buyers who purchased a home built between 2001 and 1987 or 1960 and 1913 found heating and cooling costs to be very important, compared to 49 percent of buyers whose home was built in 2015.
  • Eighty-three percent of all buyers purchased a detached single-family home, which was typically a median of 1,900 square feet.
  • Seventy-nine percent of buyers who found heating and cooling costs very important purchased previously owned homes.

View the 2016 Profile of Home Buyers and Sellers and the Heating your Home for the Holidays infographic.

November 2016 Existing-Home Sales

Thu, 12/22/2016 - 11:24
  • NAR released a summary of existing-home sales data showing that housing market activity rose for the third straight month. November’s existing-home sales reached the 5.61 million seasonally adjusted annual rate and existing-home sales are up 15.4 percent from a year ago.
  •  The national median existing-home price for all housing types was $234,900 in November, up 6.8 percent from a year ago.
  • Regionally, all four regions showed growth in prices from a year ago, with the South leading at 9.2 percent. The West had an increase of 8.5 percent, and the Midwest followed with a 6.5 percent increase. The Northeast had the smallest gain of 3.3 percent from November 2015.
  • From October, two of the four regions experienced inclines in sales with the Northeast having the biggest increase of 8.0 percent. The South followed with a gain of 1.4 percent. The West had a decline of 1.6 percent while the Midwest had the biggest decline of 2.2 percent.
  • All four regions showed a double digit increase in sales from a year ago with the West leading all regions with a 19.0 percent gain. The Midwest followed with an 18.8 percent gain. The Northeast had a gain of 15.7 percent and the South had the smallest increase of 11.6 percent. The South led all regions in percentage of national sales at 39.6 percent while the Northeast has the smallest share at 13.4 percent.
  • November’s inventory figures are down 8.0 percent from last month to 1.85 million homes for sale and the level remains below historical averages. Inventories are considerably down, 9.3 percent, from a year ago. It will take 4.0 months to move the current level of inventory at the current sales pace. It takes approximately 43 days for a home to go from listing to a contract in the current housing market, down from 54 days a year ago.
  • Single-family sales declined 0.4 percent while condos inclined 10.0 percent compared to last month. Single-family home sales inclined 16.2 percent and condo sales were also strong up 10.0 percent compared to a year ago. Both single-family and condos had an increase in price with single-family up 6.8 percent at $236,500 and condos up 5.8 percent at $222,600 from November 2015.



Housing Shortage for How Long?

Tue, 12/13/2016 - 15:27

The inventory of homes for sale continues to shrink. There were 2.02 million homes listed for sale at the end of October, representing only 4.3 months’ supply. A balanced market would be closer to 6-to-7 months’ supply.  From a year ago, the raw inventory count was down 4%, which marked nearly two straight years of decline.

This shortage of housing inventory is the principal reason why home prices have been outpacing people’s income growth for the past five consecutive years. From 2011 to 2016, the median home price will have risen by 42% compared to the median household income gain of only 17%. Such disparity hurts affordability and is unsustainable over the long haul. The only way to lessen home price growth is to bring in more supply. It cannot be a simple case of existing homeowners listing their home. Keep in mind that nearly all home sellers are also home buyers, and thereby not truly providing a net increase to the inventory. The same logic applies to underwater homeowners who come above water after home price gains. What is needed is for homebuilders to boost construction and/or for investors who bought for the purpose of renting to unload those rental properties onto the market soon. There is no indication of the second occurring because of nice rental income flows. The only way to bring additional supply, therefore, is for homebuilders to get really busy.

View NAR Chief Economist, Lawrence Yun’s full article here.

Closing Delays Rise Unexpectedly

Tue, 12/13/2016 - 08:25

NAR Research began tracking closing delays following the implementation of the TRID or Know Before You Owe rules. These rules changed the settlement process adding new closing documents, tolerances for fees, and timelines.

The time-to-close a loan, the period from contract to settlement, fell 0.3 days in November relative to the same time in 2015, the first decline on a 12-month basis in nearly two years. However, the November reading was relative to high reading in November of 2015 following TRID’s implementation. Comparing this past November with the same period in 2014 yields an increase of 4.4 days, a surprise relative the recent easing pattern.

Many of the loans that settled in November went under contract during the busy September and October period. More recently, mortgage rates rose nearly 50 basis points in November in the wake of the Presidential election. As a result, many fence-sitting home buyers and refinancers moved into the market. The extra demand may have exacerbated a bulge in early fall contracts.

The time to close a loan remains elevated, though. As depicted above, the time-to-close averaged 40.5 days from November of 2015 to November of 2016 compared to 36.7 days in the prior 12-month period. These delays should ease in the coming months as refinance volume eases and as lenders continue to adapt to the new settlement process, but a longer average time-to-close may be part of the new normal.

Student Loan Debt and Inventory

Mon, 12/12/2016 - 12:01

Student debt has grown significantly in recent years and with it concern over the impacts on first-time homebuyers. However, limited to no attention has been paid to the connection between student debt and constrained supply. A significant share of owners with student debt report that their student debt has or will delay their trade-up purchase. This problem also holds back entry-level supply from would-be first-time buyers. While increased trade-up sales would help to ameliorate tight entry-level supply, a number of constraints remain including negative equity and limited construction which must be addressed to fully solve the supply shortage.

First-time homebuyers face issues with student debt, tight credit, a soft job market, and limited housing supply. Higher student debt levels constrain first time buyers by raising their back-end debt-to-income ratio and by making it more difficult to accumulate a down payment. However, student debt also impacts current homeowners by limiting funds to build up a trade-up down payment, to pay down negative equity, and to service debts thereby affecting credit scores. According to NAR’s Student Loan Debt and Housing Report 2016[1], 31 percent of homeowners who have student debt report that their student debt has caused them to delay their next home purchase and 73 percent indicated the delay was 3 or more years. This means that each year, a certain number of trade-up sales do not occur, limiting the available supply for would-be first time homebuyers.


How significant is the problem?

Price growth has been strongest at the entry-level portion of the market due to low supplies as depicted in the chart of months supply below. This imbalance suggests that the market would readily absorb an increase in entry-level supply.


 The number of delayed trade-up sales is depicted in the table below.[2] The market impact may be sensitive to the turnover rate, so a range of estimates is provided. This analysis suggests that each year roughly 107,000 to 131,000 repeat sales do not occur due to student debt. However, these trade-up sales release supply, likely entry-level supply, to the market that could be consumed by first-time buyers (or investors/renters). Thus the total impact is closer to double this figure.

Trade-up buyers would likely move into price-points in the market with more supply and where builders are more likely to meet demand though land, labor, financing, and regulatory issues constraint builders at all price points. However, not all trade-up buyers may find the “right” home in the current market of tight supply.

Where Does Student Debt Constrain Supply?

At the local level, the states with the highest level of owners with student debt held back from a trade-up purchase are in California, Texas, New York, Florida, and Ohio. These areas tend to have large populations, but some are also hot-spots for younger buyers.

 Implications for First-Time Buyer Share

NAR’ Profile of Home Buyers and Sellers revealed that the first-time buyer share jumped from 32 percent in 2015 to 35 percent in 2016. An increase in entry-level inventory would likely result in greater first-time buyer participation and it would ease price pressure in this segment. If trade-up demand were to rise as estimated above and all current owner’s homes sold to first-time buyers, the first-time buyer share would rise to a range of 35.6 percent to 35.7 percent, still well off the 40 percent historic norm for primary residence buyers. Over 5 years, this could increase first-time homebuyer sales by 550,000 to 700,000 and total sales could rise by 1.1 to 1.4 million in the short term. [3]

 However, student debt is not the only factor impacting entry-level supply. Nearly 3.2 million owners remain underwater and the share of underwater owners is higher in the entry-level price range.[4] Furthermore, investors bought up a significant number of entry-level units in the wake of the great recession turning those properties into profitable rentals that are not likely to return to the market. Finally, builders remain constrained as noted above. While an increase in supply due to higher trade-up purchases might help to ameliorate the supply issue, it would not resolve it.

The impact of student debt on first-time buyers’ finances has been widely discussed. Student debt also has an impact on entry-level supply and the trade-up process. Addressing student debt will pay dividends on both the demand and supply side for housing.


[2] These estimates are conservative in that they do not include private loans.

[3] One might argue that this purchase delay simply shifts demand into the future. However, it could cause price and construction distortions in the short term and limits the equity accumulation of owners in the short-term and long-term as this delay is persistent.

[4] Corelogic

October 2016 EHS Over Ten Years

Fri, 12/09/2016 - 11:11

Every month NAR produces existing home sales, median sales prices and inventory figures. The reporting of this data is always 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 relative to last month, adjusting for seasonal factors, and comment on the potential direction of the housing market.

The data below shows what our current month data looks like in comparison to the last ten October months and how that might compare to the “ten year October average” which is an average of the data from the past ten October months.

  • The total number of homes sold in the US for October 2016 is higher the ten year October average. Regionally, all four regions were above the ten year October average, while the Midwest and South led with stronger sales.
  • Comparing October of 2006 to October of 2016 fewer homes were sold in 2016 in the US and all regions, the Northeast enduring the biggest decline of 29.9 percent. The US had a drop of 11.8 percent while the West had the smallest drop in sales at 2.3 percent over the ten year period. The South led all regions in sales in 2006 and 2016.
  • This October the median home price is higher than the ten year October average median price for the US and all four regions. The West led all regions with 22.8 percent followed by the South with 18.7 percent. The Midwest was higher by 16.4 percent and the Northeast was above the average by 4.3 percent.
  • Comparing October of 2016 to October 2006, the median price of a home increased in all regions. The South led all regions with a gain of 10.0 percent followed by the Midwest with 9.3 percent. The US had an incline in price of 6.1 percent while the Northeast had the smallest gain of 0.8 percent and the West experienced a modest gain of 1.2 percent.
  • The median price year over year percentage change shows that home prices began to fall in 2008 nationally, and prices dipped by double digits in 2008 in the West which had the biggest decline of 17.7 percent. The trend for median home prices turned around completely in 2012, when all regions showed price gains. The West had the biggest price increase of 21.7 percent and the US showed 10.0 gains. The following year, 2013, price growth rates peaked and the West had the largest gain in price of 16.2 percent, while the Northeast had the smallest gain at 5.9 percent from 2012 to 2013. This October the West (7.8%) had the highest year over year price change over the US and the other three regions. Even though prices fell and rose dramatically over the ten-year time period, if we average year over year changes over that time, prices grew less than one percent on average each year for the US and three regions and were down on average only in the Northeast.  The US and the South had an average gain of 0.4 percent per year. The Midwest had an average gain of 0.7 percent per year and the West had the biggest gain of 0.8 percent per year. These average gains were computed by averaging the year over year changes. Because these year over year changes apply to different home values each year we can find an average decline in the Northeast event though prices in October 2016 were higher than October 2006 prices in that region.
  • There are currently fewer homes available for sale in the US this October than the ten year October average.  This current October the US had the fastest pace of homes sold relative to the inventory when months supply was 4.3 months. In 2007 the US had the slowest relative pace when it would have taken 10.6 months to sell the supply of homes on the market at the prevailing sales pace. Relative to all supply, the condo market had the biggest challenge in 2008 when it would have taken 12.7 months to sell all available inventory at the prevailing sales pace.
  • The ten year October average national months supply is 7.1 while single family is 6.9 and condos are 8.5 months supply.
  • Prices fell the October average year over year percentage change averaging out price change over the ten years prices are up less than one percent for the US and three regions and down in the Northeast.

View the full Oct 2016 EHS Over Ten Years slides.

Sales for Investment Purpose: 13 Percent of Residential Sales in October 2016

Fri, 12/09/2016 - 10:40

In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members the characteristics of the most recent sale that closed in the reference month, including “Did the buyer purchase the property as an investment property?”

Investment sales made up 13 percent of sales in October 2016 (14 percent in September 2016; 13 percent in October 2015). At their peak in 2009, investment sales were 25 percent of sales. Purchases for investment purposes have generally been on the decline, with fewer distressed sales on the market and with home prices rising to levels that make the purchase less attractive as an investment. Also, low mortgage rates are less of a benefit to investors since many of them use cash to purchase a home.

Distressed sales accounted for five percent of sales in October 2016 (four percent in September 2016; six percent in October 2015). Foreclosed properties were four percent of residential sales, while short sales were only one percent of residential sales.[1] With rising home values, improved economic conditions, and fewer foreclosures, the share of sales of distressed properties has generally continued to decline. Distressed sales accounted for about a third to half of sales until 2012 when they began to fall below this level.

As the shares of investment and distressed sales to total sales have declined, so has the share of cash sales. Purchases that were financed with cash were 22 percent of sales in October 2016 (21 percent in September 2016; 24 percent in October 2015. Buyers of homes for investment purposes, distressed sales, second homes, and foreign clients are more likely to pay cash than first-time home buyers.


[1] The survey asks respondents who had a sale in the month to report on the characteristics of the most recent sale closed.

October 2016 Housing Affordability Index

Fri, 12/09/2016 - 10:16

At the national level, housing affordability is up from a year ago for the fourth consecutive month. Mortgage rates dipped and stood at 3.76 this October but they are already higher for current home shoppers.

  • Housing affordability increased from a year ago in October moving the index up 0.5 percent from 169.4 to 170.2. The median sales price for a single family home sold in October in the US was $233,700 up 5.9 percent from a year ago.
  • Nationally, mortgage rates were down 29 basis points from one year ago (one percentage point equals 100 basis points) while incomes rose 2.7 percent.
  • Regionally, the West had the biggest increase in price at 7.6 percent. The South had an increase of 6.9 percent while the Midwest had a 5.7 percent gain in price. The Northeast had the smallest increase of 2.8 percent.
  • Regionally, two of the four regions saw increases in affordability from a year ago. The Northeast had the biggest increase of 3.5 percent. The Midwest had a modest increase of 0.8 percent. The South had a decline in affordability of 1.8 percent while the West had a decline of 0.5 percent.
  • By region, affordability is up in all regions from last month. The Midwest had the biggest increase of 3.8 percent. The Northeast followed with a gain of 3.2 percent and the South had a gain of 2.6 percent. The West had the smallest increase in affordability of 0.3 percent.
  • Despite month to month changes, the most affordable region is the Midwest where the index is 216.9. The least affordable region remains the West where the index is 120.4.  For comparison, the index is 173.5 in the South, 178.5 in the Northeast.
  • Mortgage applications are currently down this week and while rates remain low from a broad historical perspective, they have increased notably from the lows seen as recently as just before the election period. These housing affordability numbers reflect those lower mortgage rates, but we can expect to see these higher mortgage rates dampen housing affordability in the months ahead. Job creation is steady and will help stabilize consumer confidence going forward. More inventory and new home creation will help tame home prices which are still growing faster than incomes.
  • What does housing affordability look like in your market? View the full data release here.
  • The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation here.

2016 Home Buying Trend: Purchasing Larger Homes Continues

Wed, 12/07/2016 - 15:39

Home buyer demographics change slightly from year to year due to macroeconomic forces from the health of the economy to inflation to the global trade on oil prices. The National Association of REALTORS® recently released its 2016 Profile of Home Buyers and Sellers report and the trend of purchasing up in home size has continued again this year.

First, in all regions of the country, the desire to own a home of one’s own continues to dominate as the top reason for purchasing a home, almost three times as much as any other reason to purchase. Nationally, the desire to purchase one’s own home was 31 percent of all buyers, followed by the desire for a larger home (10 percent), a job-related relocation or move (eight percent), and a change in family situation (eight percent). For first-time buyers, the desire to purchase one’s own home was 67 percent.

In five out of nine regions in the United States, buyers continued to trade up and buy bigger homes than last year. According to the 2016 report, 46 percent of all buyers traded up in the size of their home, up from 42 percent in 2015. In the 2015 report, buyers reported that they were looking for homes similar in size at 29 percent compared to 26 percent in 2016.


The top regions that continued to trade up in size were New England, East North Central, South Atlantic, Mountain, and Pacific. Interestingly, share of buyers that traded up in size in West North Central last year, in contrast, went back down to six percent in 2016 (similar to 2014) from 13 percent in 2015. The regions with the share of buyers that traded up in 2015 but fell slightly in 2016 include the Middle Atlantic, East South Central, and West South Central.

While these regions where the share may have dropped a few percentage points, the desire for a larger home was still the second most frequently cited reason in almost every region. The only exceptions were in the West North Central that cited the desire to be closer to family, and the West South Central that cited a job relocation as the second most common reason to purchase a home.

One reason for this shift in purchasing power is that people have more equity from selling their previous homes in order to buy a bigger one. Since the housing downturn in 2010, many homes were worth less than their mortgages. Over the last several years, home prices have been rising. In 2014, 17 percent reported waiting or stalling to sell their home, which dropped to 13 percent in 2015 and again to 12 percent in 2016. Sellers also reported that they sold their homes for a median of $43,100 more than they purchased it, up from $40,000 in 2015 and $30,100 in 2014. The most common reason for selling a home in 2016 was that the home was too small at 18 percent, up from 16 percent in 2015.


The typical seller in 2016 was 54 years old (same as the last two years) and the median household income in 2015 was $100,700, down from $104,000 in 2014. Sellers aged 35 to 44 years were the largest age group to sell homes last year at 22 percent. We can speculate that the sellers probably had a child in the last few years and wanted a bigger home to expand their family. We also see the trend where repeat buyers have been able to sell their homes at a higher price in order to trade up and purchase larger homes. Sellers aged 55 to 64 also made up 22 percent of all sellers, possibly looking to downsize to a smaller home as they near retirement.

First-time Homebuyers: 33 Percent of Residential Sales in October 2016

Wed, 12/07/2016 - 11:19

In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members the characteristics of the most recent sale that closed in the reference month, including “Was the buyer a first-time buyer?”

The share of first-time home buyers accounted for 33 percent of residential sales in October 2016 (34 percent in September 2016; 31 percent in October 2015), the fifth consecutive month the share has held at above 30 percent.[1] Sustained low mortgage rates and job growth are likely underpinning the sustained, albeit modest, increase in homebuying by first-time buyers. The 30-year fixed mortgage rate has stayed below four percent since August 2015, while the unemployment rate has hovered at or below five percent since October 2015.[2]

Buyers 34 years old and under, who are likely to be first-time buyers, accounted for 31 percent of residential buyers in October 2016, (31 percent in September 2016; 28 percent in October 2015). The share of buyers 34 and under has been on an uptrend from the 26 percent share in July 2013 when this information was first collected in the survey.[3]

Homebuyers who were renting prior to their recent home purchase accounted for 42 percent of sales (41 percent in September 2016; 36 percent in October 2015). The fraction of buyers who were renting prior to their recent home purchase has increased from the 36 percent share in September 2014 when this information was first collected.[4]

[1] First-time buyers accounted for 35 percent of all home buyers based on data from NAR’s 2016 Profile of Home Buyers and Sellers (HBS), up from 32 percent in 2016. The HBS is a survey of primary residence home buyers and does not capture investor purchases but does cover both existing and new home sales. The RCI Survey is a survey of REALTORS® about their transactions and captures purchases for investment purposes and second homes for existing homes.

[2] Average contract rates on 30-year conventional mortgages reported by Freddie Mac, downloaded from Haver Analytics. The unemployment rate is among the population 16+ years old from the Burea of Labor Statistics, downloaded from Haver Analytics.

[3] NAR’s 2016 Profile of Home Buyer and Sellers (HBS) reports that among primary residence home buyers, 28 percent were 18-34 years old. The HBS surveys primary residence home buyers, while the monthly RCI Survey surveys REALTORS® and also captures purchases for investment purposes and vacation/second homes.

[4] NAR’s 2016 Profile of Home Buyer and Sellers (HBS) reports that among primary residence home buyers, 41 percent rented an apartment or house. The HBS surveys primary residence home buyers, while the monthly RCI Survey surveys REALTORS® and also captures purchases for investment purposes and vacation/second homes.

The Sources of Downpayments Among Different Buyer Types

Tue, 12/06/2016 - 15:43

Since 1997, the Profile of Home Buyers and Sellers has collected data on the sources of buyers’ downpayment for when they purchase a home. This year, 88 percent of all buyers financed their home and 98 percent of buyers ages 18 through 44 financed the home. All buyers financed a median of 90 percent of the mortgage and had a median downpayment of 10 percent. For first-time buyers, the median percent financed was 94 percent and they put down six percent. For repeat buyers, they financed 86 percent and put down a median of 14 percent.

In 2016, 61 percent of all buyers used savings for the downpayment, compared to 76 percent for first-time buyers and 53 percent of repeat buyers. Thirty-five percent of all buyers used the proceeds from the sale of a primary residence for the downpayment, compared to only two percent of first-time buyers (who may have inherited the home) and 52 percent of repeat buyers. Thirteen percent of all buyers used a gift from a relative or friend, 24 percent for first-time buyers, and eight percent for repeat buyers.

Comparatively in 1997, 70 percent of the downpayment for first-time buyers came from savings, none from the sale of another residence, and 25 percent as a gift from a friend or relative. Savings remained the number one source of the downpayment for first-time buyers over the course of two decades. In 2003, savings dropped to only 60 percent as a source of the downpayment and 61 percent in 2009, the two lowest points on the timeline. Savings was at a peak as a source of the downpayment in 2014 and 2015 when it hit 81 percent for first-time buyers. As for a gift from a friend of relative as the source of the downpayment, this share remained relatively flat over 20 years, dropping to to 22 percent in the mid-2000’s and up to 27 percent in the 2010’s. Proceeds from the sale of a primary residence remained small for first-time buyers, but grew slightly over the years to four percent from 2003 to 2007 and back down to two percent in 2016.


For repeat buyers in 1997, 51 percent used savings for the downpayment and 52 percent used proceeds from the sale of a primary residence. In 2016, 53 percent used savings and 53 percent used the proceeds from the sale of a primary residence. Savings dipped to the mid-40 percentiles in the 2000’s for repeat buyers, getting as low as 40 percent in 2005 and 2006. In the 2010’s, it jumped up to the high-50th percentile hitting 59 percent in 2011 and 2012. Proceeds from the sale of a primary residence saw an inverse relationship over two decades, where is jumped up to the mid-60 percentiles in the 2000’s, reaching a high of 66 percent in 2005 as a source of the downpayment. In the 2010’s, it decreased to the low-40 percentiles for repeat buyers hitting 40 percent in 2012.

To follow this series as we discuss the findings of 35 years of profile data, check out the hashtag #NARHBSat35 on your social channels. NAR Research will be releasing trend line data since 1981 to celebrate 35 years of home buyer and seller demographic research.