The information provided by REALTORS® about local market conditions in January 2015 indicated a broad uptick in confidence and market activity compared to that in December 2014.
REALTORS® reported more buyer activity in their markets on the heels of lower mortgage rates but, inventory was “low” in most areas, especially for “fresh” and “affordable” listings. A lower than normal level of new construction contributed to the lack of inventory. Qualifying for a mortgage was reported as difficult, although becoming easier (e.g., TX, CA, NY). Problems facing potential home buyers included modest income growth, weak credit and income profiles, and in the case of condominium buyers, projects not meeting eligibility guidelines for borrowers to obtain FHA/VA or conventional financing.
Looking ahead at the spring market and the increased buying interest, REALTORS® were broadly more optimistic about the outlook for the next six months. REALTORS® cited the positive effect of mortgage rates now at less than 4 percent and the reduction in FHA monthly mortgage insurance premium rates (by 0.5 percentage points). Optimism also increased in anticipation of the seasonal uptick in the spring season.
REALTORS® in states adversely affected by the harsh winter (e.g., MA, PA, IL) reported market slowdowns. In states with more oil and gas extraction activity (e.g., TX), there was concern about the impact of the steep drop in oil prices in their market. In coastal areas (e.g., FL, NJ), the uncertainty regarding flood insurance rates continued to be reported as affecting sales.