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In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® (NAR) asks members “How do you rate the past month's traffic in the neighborhood(s) or area(s) where you make most of your sales?” NAR compiles the responses on buyer traffic into a REALTORS® Buyer Traffic Index and the responses on seller traffic into a REALTORS® Seller Traffic Index.
The REALTORS® Buyer Traffic Index[1] registered at 61(64 in July 2016; 60 in August 2015), indicating that more respondents viewed buyer traffic conditions as “strong” rather than “weak,” according to the August 2016 REALTORS® Confidence Index Survey Report. The index is essentially unchanged compared to one year ago, but it is lower compared to the previous month, possibly due to seasonal slowdown and the impact of higher prices on demand.
Meanwhile, supply conditions remained, by and large, tight in many areas. The REALTORS® Seller Traffic Index registered at 44 (45 in July 2016; 45 in August 2015), indicating that more respondents viewed seller traffic conditions as “weak” rather than “strong.”
The maps below show the condition of buyer and seller traffic using data collected from June‒August 2016. Local conditions vary in each state, but the REALTORS® Buyer Traffic Index indicates that markets were “moderate” to “very strong” in all states except in Wyoming, North Dakota, and Connecticut where buyer traffic was “weak.”[2]
Seller traffic was “weak” in many states, measured by the REALTORS® Seller Traffic Index.[3] However, seller traffic was “moderate” to “strong” in several states, including those that had benefited from the oil boom but are now facing slower job growth because of lingering lower oil and natural resources prices—Alaska, Montana, North Dakota, New Mexico, Texas, and Louisiana.
Employment conditions affect the demand and supply for housing. The chart that follows shows the change in non-farm employment in July 2016 from July 2015 by state. Non-farm employment contracted in the oil-producing states of North Dakota, Wyoming, Oklahoma, and Louisiana and increased only modestly in several other natural resources states in the Midwest and South.[4] The slower job growth and job cutbacks in these states are likely leading to more seller traffic and a shift to a buyer’s market.[5] Meanwhile, several other oil-states such as Utah, Colorado, Texas, and New Mexico have job growth near to or above the national average. Employment growth was strongest in Washington, Oregon, Idaho, Utah, Colorado, and Florida. Buyer traffic was “strong” to “very strong” in these states.
[1]The Buyer Traffic Index provides information on the level of homebuying demand or interest which may materialize as a contract to purchase or closed sale after two or three months.
[2] The index for each state is based on data for the last three months to increase the observations for each state. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations. Respondents were asked “How do you rate the past month's buyer traffic in the neighborhood(s) or area(s) where you make most of your sales?” Respondents rated conditions or expectations as “Strong (100),” “Moderate (50),” and “Weak (0).” The responses are compiled into a diffusion index. For graphical purposes, index values 25 and lower are labeled “Very weak,” values greater than 25 to 48 are labeled “Weak,” values greater than 48 to 52 are labeled “Moderate,” values greater than 52 to 75 are labeled “Strong,” and values greater than 76 are labeled “Very strong.”
[3] Respondents were asked “How do you rate the past month's seller traffic in the neighborhood(s) or area(s) where you make most of your sales?” Respondents rated conditions or expectations as “Strong (100),” “Moderate (50),” and “Weak (0).” The responses are compiled into a diffusion index. A value of 50 indicates a balance of respondents who reported “Strong “and “Weak” markets. For graphical purposes, index values 25 and lower are labeled “Very weak,” values greater than 25 to 48 are labeled “Weak,” values greater than 48 to 52 are labeled “Moderate,” values greater than 52 to 75 are labeled “Strong,” and values greater than 76 are labeled “Very strong.”
[4] For a review of states in which oil has an outsized economic impact, see this blog: http://economistsoutlook.blogs.realtor.org/2016/03/21/is-california-an-o...
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