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While local conditions vary, the REALTORS® buyer traffic and current conditions confidence indices remained above 50 in August 2016, indicating that more local markets were “strong” rather than “weak,” according to the August 2016 REALTORS® Confidence Index Survey Report.[1] The buyer traffic index, an indicator of homebuying interest, stood at about the same level as last year but was lower than the previous month’s level, perhaps reflecting some seasonal slowdown as well as an easing of demand due to the steep price growth that has made purchasing a home increasingly less affordable.[2] The seller traffic index has remained below 50 since September 2008, indicating that seller activity remains generally “weak.” Relatively strong demand amid tight supply has pushed prices up to increasingly less affordable levels.
First-time homebuyers accounted for 31 percent of sales, essentially unchanged from its levels one year ago and the previous month. Purchases for investment purposes made up 13 percent of sales, and cash sales accounted for 22 percent of sales, both substantially unchanged from the levels one year ago and the previous month. Distressed properties were five percent of sales, down from seven percent last year. Nationally, amid tight supply, half of properties that sold in August 2016 were on the market for 36 days or less compared to 47 days one year ago.
Very low supply, declining affordability, appraisal issues, and lender processing delays were reported as the key issues affecting sales. Still, most respondents were confident about the outlook for the next six months across all property types, with the six-month confidence indices for single-family homes and townhomes registering over 50. With home prices increasingly becoming less affordable, respondents typically expected prices to increase at a slower pace of 3.1 percent in the next 12 months.
[1] An index greater than 50 indicates the number of respondents who reported “strong” (index=100) outnumbered those who reported “weak” (index=0). An index equal to 50 indicates an equal number of respondents reporting “strong” and “weak” market conditions. The index is not adjusted for seasonality effects.
[2] An index greater than 50 indicates the number of respondents who reported “strong” (index=100) outnumbered those who reported “weak” (index=0). An index equal to 50 indicates an equal number of respondents reporting “strong” and “weak” market conditions. The index is not adjusted for seasonality effects.
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