REALTOR® confidence over current housing conditions and their six-month outlook for single-family, townhome, and condo properties all showed a slight dip last month – indicative of a slowing housing market, according to the July 2015 REALTOR® Confidence Index, a survey of nearly 3,000 practitioners about the state of housing. Nevertheless, the index remains well-above levels from last year.
The index that measures buyer traffic slid to 62 in July while seller traffic remained below 50 due to a tight supply of homes for-sale nationwide. Any confidence index below 50 indicates that more respondents view conditions as “weak” than “strong.” Properties in July also were staying on the market longer at a median of 42 days across the country.
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“REALTOR® respondents expressed concern that the steep pace of price appreciation is eroding affordability,” according to the REALTOR® Confidence report. “Respondents also expressed concern about the possible adverse effect on market transactions and closing when the new disclosure regulations under TILA-RESPA Integrated Disclosure (TRID) take effect on Oct. 3.” About 25 percent of REALTORS® reported that they or their office have not made any effort or don’t know of any efforts to deal with the impending changes from the new disclosure regulations.
REALTOR® respondents also cited that the limited number of homes for-sale was another issue weighing down the market’s momentum. According to the report, demand continues to outpace supply in states such as California, Washington, Oregon, Nevada, Colorado, Massachusetts, Florida. On the other hand, supply conditions are showing some improvement in Texas, Utah, North Dakota, South Dakota, Montana, Wyoming, and Utah.
Besides inventory, REALTORS® also reported decreasing affordability as a rising concern. Seventy percent of respondents reported rising prices compared to only 43 percent in December 2014. REALTORS® reported that the sharp price rises had made homes unaffordable for many buyers.
The median price of all existing homes was $236,400 in June, an increase of 6 percent on an annual basis and surpassing a previous price peak price of $230,400 that was recorded in July 2006.
“Strong demand amid tight supply has pushed up prices,” the report notes. “While rising prices are lifting home owners out of negative equity, the strong price recovery amid modest growth in incomes is also making homes less affordable and dampening demand.”
However, homes are still affordable overall. According to NAR, in June 2015, the median family income of $66,637 was higher than the necessary qualifying income to purchase a house of $43,536 nowadays.
REALTORS® surveyed expect home prices to continue to rise over the next 12 months, at an average of 3.6 percent.
Price expectations vary considerably across locales. REALTOR® respondents in Colorado and Florida were the most optimistic when it came to price expectations, with the median price growth expected to be around 5 to 6 percent. REALTOR® respondents in Washington, Oregon, Nevada, Texas, and Georgia expect the median price growth to be 4 to 5 percent. On the other hand, REALTORS® reported a more modest pace of price increases in many of the Northeast states at less than 3 percent.