REALTORS® Losing Confidence in Market
REALTORS® are losing confidence in current market conditions and are downgrading their outlook for the next six months, according to the latest REALTOR® Confidence Index, a monthly survey sent to more than 50,000 real estate practitioners. Despite that, the overall sentiment remains positive.
In the single-family market, REALTORS®’ confidence about current conditions dipped from 62 in June to 60 in July. An index reading above 50 indicates that more than half of REALTORS® view housing conditions as “strong.”
“Tight inventory, difficulties in obtaining mortgages, and weak job growth were the main concerns reported by REALTORS®,” according to the report. “Changes in the FHA mortgage insurance premium regulations, the cost of obtaining flood insurance, and increases in property taxes were also reported to be having a negative impact on potential sales. FHA financing regulations continued to be reported as severely impeding condominium sales.” Many REALTORS® also reported that the continued tight lending environment was making the home-buying process “long and difficult” even for “quality borrowers.”
For-sale inventories are ticking up in many markets, particularly in California, Florida, Maine, Michigan, Indiana, Idaho, and Virginia. However, inventories generally remained tight in many areas, with “lower-” and “middle-priced” homes reportedly having the lowest supplies.
“Although the home-price recovery has encouraged more listings, the strong price growth amid modest wage income gains has also made homes less affordable, creating a demand for lower-priced homes that are, unfortunately, in short supply,” the report notes.
Fewer REALTORS® also were reporting rising prices compared to June, but in general, prices are still rising broadly. About 65 percent of REALTORS® reported that the price of their “average home transaction” is higher today compared to a year ago; about 23 percent reported constant prices; and 12 percent reported lower prices. REALTORS® reported that tight for-sale inventories is sustaining the price growth in markets.
The majority of REALTORS® expect home prices to increase within the next 12 months, with the median expected price increase to be 3.4 percent. REALTORS® project prices to rise by the most — greater than 5 percent to 6 percent — in Texas, Florida, and Hawaii.