REALTORS® Are Generally Optimistic Over the Next Six Months

In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® (NAR) asks members “What are your expectations for the housing market over the next six months compared to the current state of the market in the neighborhood(s) or area(s) where you make most of your sales: For single-family homes? For townhomes? For condominiums? NAR compiles the responses for each property market into a REALTORS® Confidence Index.

The REALTORS® Confidence Index—Six-Month Outlook for single-family homes and townhomes registered above 50, indicating that more REALTORS® expected market conditions to be “strong” than “weak” over the next six months.[1] The index for condominiums was at 50, above the 44 level registered at this time in 2015. The approval of H.R. 3700, the “Housing Opportunity Through Modernization Act of 2016,” is expected to boost purchase activity in the condominium market.[2] Among other measures, the law eases access to FHA condominium financing by reducing the FHA condo owner occupancy ratio from 50 percent to 35 percent, directing the FHA to streamline the condominium re-certification process, and providing more flexibility for mixed-use buildings.

outlook

In the single-family homes market, the outlook in the next six months is “moderate” in many states to “very strong” in the states of Washington and Rhode Island.[3] In the townhomes and condominiums markets, the outlook is more mixed, ranging from “very weak” in West Virginia to “very strong “in the District of Columbia.

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[1] Respondents were asked “What are your expectations for the housing market over the next six months compared to the current state of the market in the neighborhood(s) or area(s) where you make most of your sales?” The responses for each type of property are compiled into an index. An index of 50 indicates a balance of respondents having “weak” (index=0) and “strong” (index=100) expectations or all respondents having moderate (=50) expectations. The index is not adjusted for seasonality.

[2]The bill, which was championed by NAR, passed the House of Representatives 427-0 and the Senate under unanimous consent on July 14, 2016 and was signed by President Obama on July 29, 2016. See http://www.realtor.org/articles/president-obama-signs-hr-3700

[3] The market outlook 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 fewer than 30 observations. Respondents rated conditions or expectations as “Strong (100),” “Moderate (50),” and “Weak (0).” The responses are compiled into a diffusion index. A diffusion index greater than 50 means that more respondents rated conditions as “Strong” than “Weak.” For graphical purposes, index values 25 and lower are labeled “Very weak,” values greater than 25 to 48 are labeled “Weak,” values greater than 48 to 52 are labeled “Moderate,” values greater than 52 to 75 are labeled “Strong,” and values greater than 75 are labeled “Very strong.”