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Market conditions vary across local markets and states, but the REALTORS® confidence and traffic indices indicate generally unchanged market activity in December 2015 compared to November 2015. Compared to December 2014, market activity slightly improved, according to the December 2015 REALTORS® Confidence Index Survey Report.
Sustained job creation and the low interest rate environment appear to be sustaining housing demand, even as the lack of inventory and tight underwriting standards are constraining market activity. However, in oil-producing states, homebuying demand appears to be easing. The TILA/RESPA Integrated Disclosure (TRID) regulations, commonly known as “Know Before You Owe,” which came into effect on October 3, 2015, appear to have lengthened the closing period: about 53 percent of respondents reported longer closing times compared to a year ago, up from 37 percent in the October 2015 survey. It typically took 40 days to close a sale, up from 36 days in July 2015 when NAR started collecting this information in the survey.
The share of first-time home buyers rose slightly to 32 percent of sales. Purchases for investment purposes accounted for 15 percent of sales, while distressed properties made up eight percent of sales. Cash sales accounted for 24 percent of sales. Properties were typically on the market 58 days nationally compared to 66 days a year ago, an indication that supply remains tight relative to demand.
Tight inventories, decreased affordability, and more stringent credit standards continued to be reported as key issues affecting sales, especially to first-time homebuyers. The collapse in oil prices is also a concern among REALTORS® in oil-producing states. Still, respondents were broadly “strongly” confident about the overall outlook for the next six months, especially in the single-family homes market, with the confidence index registering at 72 (50 indicates a “moderate” outlook). Local conditions differ, but respondents typically expected home prices to increase 3.3 percent.
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