REALTORS® are more optimistic as they head into the spring-selling season, with their housing outlook for the next six months looking more upbeat, according to the January 2015 REALTORS® Confidence Index, a survey of more than 4,000 REALTORS® on the latest housing conditions in their local markets. REALTORS® citied the effect of mortgage rates -- that have been less than 4 percent lately -- and a reduction in Federal Housing Administration mortgage insurance premiums as two big reasons for renewed optimism.
Spring Housing Optimism
Some markets, however, did show a slight dip in confidence in January. Real estate professionals in Massachusetts, Pennsylvania said the harsh weather was causing market slowdowns. Also, states with more oil and gas extraction activity, like in Texas, reported growing concerns about the impact that the steep drop in oil prices would have on their market. In coastal areas – like Florida and New Jersey – some real estate professionals expressed continued concern over uncertainty regarding flood insurance rates that were affecting sales.
Still, overall, REALTORS® nationwide are reporting greater buyer activity in their markets, but said that there was not enough inventory of homes for-sale to meet the increase in demand. Inventory was reported as "low" in most areas, particularly for "affordable" listings. Also, a low level of new home construction, they say, was contributing to the lack of inventory.
The biggest obstacles facing the market, according to REALTORS® surveyed: qualifying for a mortgage (although that has been showing signs of improvement); modest income growth among home buyers; weak credit and income profiles; and for condo buyers in facing persistent problems with projects not meeting eligibility guidelines for FHA or VA or conventional financing.
About 47 percent of REALTORS® surveyed reported that the price of their "average home transaction" was higher in January compared to a year ago. The median home price of an existing home as of December 2014 was $209,500, up from $197,700 in December 2013.
REALTORS® continue to expect home prices to pick up modestly over the next year, with the median appreciation expected about 3.2 percent this year. States with the most upbeat price expectations include the District of Columbia, Florida, and Nevada, where real estate professionals there expect home prices to increase about 4 to 5 percent this year.
Source: “REALTORS® Confidence Index” (January 2015) and “REALTORS® Confidence Index Survey: January 2015 Survey Highlights,” National Association of REALTORS® Economists’ Outlook Blog (Feb. 24, 2015)