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Supply Conditions Continue to be “Weak” Across Most States in November 2015

In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members “How would you rate the past month’s traffic where you make most of your sales?”

During the period September-November 2015, buyer traffic, measured by the REALTORS® Buyer Traffic Index, was “strong” in 24 states and “very strong” in the District of Columbia.[1]

Meanwhile, seller traffic, measured by the REALTORS® Seller Traffic Index, was broadly “weak” across most states.[2] The gap in demand and supply has led to strong price growth against modest gains in income, making a home purchase increasingly less affordable.  NAR median existing home sale prices were up 6.3 percent in November 2015 from a year ago, while median weekly earnings rose by 1.5 percent in Q3 2015 from the same period a year ago.

The construction of new privately owned housing units has been improving, reaching 1.2 million units in the third quarter of 2015. However, roughly 35 percent of recent new construction has been multi-family structures which are typically for rental occupancy. Historically, multi-family structures accounted for only 20 percent of new construction, so the availability of single-units for purchase among recently constructed properties is lower than is historically normal. REALTORS® reported low inventory of properties in the lower price range and for those that are move-in ready.

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[1] 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 less 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?” The responses were “Strong (100)”, “Moderate (50),” and “Weak (0).” Respondents rated conditions or expectations as “Strong (100)”, “Moderate (50)”, and “Weak (0).” The responses are compiled into a diffusion index. Values 25 and lower are considered “very weak”, values greater than 25 to 49 are considered “weak”, a value of 50 is considered “moderate”, values greater than 50 to 75 are considered “strong”, and values greater than 76 are considered “very strong”.

 

[2] 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?” The responses were “Strong (100)”, “Moderate (50),” and “Weak (0).” Respondents rated conditions or expectations as “Strong (100)”, “Moderate (50)”, and “Weak (0).” The responses are compiled into a diffusion index. Values 25 and lower are considered “very weak”, values greater than 25 to 49 are considered “weak”, a value of 50 is considered “moderate”, values greater than 50 to 75 are considered “strong”, and values greater than 76 are considered “very strong”.