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In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members “How do you rate the past month's buyer/seller traffic in the neighborhood(s) or area(s) where you make most of your sales?”
REALTORS®reported strong home buying demand amid tight supply in January 2017, according to the January 2017 REALTORS® Confidence Index Survey Report, a monthly survey of REALTORS® about their sales activity and local market conditions.[1]
Local conditions vary in each state, but the REALTORS® Buyer Traffic Index indicates that buyer traffic conditions can be characterized as “moderate” to “very strong” in many states except in North Dakota and Delaware where buyer traffic conditions were “weak.”[2] Buyer traffic conditions were “very strong” only in the state of Washington.
The REALTORS® Seller Traffic Index indicates seller traffic conditions were “weak” in most states, although 12 states and the District of Columbia had “moderate” to “strong” seller traffic conditions. Respondents reported that demand is strong, but there is a severe lack of supply especially of affordable homes. This is consistent with available data on the affordability of active housing inventory.[3]
Employment conditions affect the supply and demand for housing. The chart that follows shows the change in non-farm employment from December 2015 to December 2016 by state. Nationally, employment rose 1.4 percent in December 2016. Employment growth was strongest in Washington, Oregon, California, Nevada, Utah, Missouri, Georgia, Florida, Massachusetts, and the District of Columbia. In these states, buyer traffic was “moderate” to “very strong”. Non-farm employment contracted in the oil-producing states of Alaska, North Dakota, Wyoming, Kansas, Oklahoma, Louisiana, and Mississippi, as well as in Connecticut and Maine.[4] In some of these states, the job cutbacks have led to “moderate” seller traffic conditions, based on the REALTORS® Seller Traffic Index. Texas, which has a more diversified economy, has been more resilient than other oil-producing states, with employment growing slightly above the national average.[5]
Nationally, the REALTORS® Buyer Traffic Index registered at 63 in January 2017 (57 in December 2016; 59 in January 2016), indicating that more respondents viewed buyer traffic conditions as “strong” rather than “weak.”[6]
The REALTORS® Seller Traffic Index registered at 41 in January 2017 (39 in December 2016; 40 in January 2016), indicating that more respondents viewed seller traffic conditions as “weak” rather than “strong.” Supply conditions have remained largely tight in many areas, with the index registering below 50 since December 2008.
[1]The author thanks Danielle Hale, Managing Director, Housing Research; Meredith Dunn, Research Communications Manager; and Amanda Riggs, Research Survey Analyst for their comments. Any errors are attributable to the author.
[2] To increase the number of observations for each state, the index is based on data for the last three months. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations. Respondents are asked, “How do you rate the past month's buyer/seller traffic in the neighborhood(s) or area(s) where you make most of your sales?” Respondents rated conditions or expectations as “Strong (100),” “Moderate (50),” and “Weak (0).” The responses are compiled into a diffusion index. For graphical purposes, index values 25 and lower are labeled “Very Weak,” values greater than 25 to 45 are labeled “Weak,” values greater than 45 to 55 are labeled “Moderate,” values greater than 55 to 75 are labeled “Strong,” and values greater than 75 are labeled “Very Strong.” The range of +/-5 around 50 approximates the historical margins of error at the 95 percent confidence level for small states.
[3] See for example: https://www.nar.realtor/news-releases/2017/02/nar-realtorcom-identify-growing-rift-between-housing-availability-and-affordability and https://www.nar.realtor/topics/realtors-affordability-distribution-curve...
[4] Source: U.S. Department of Energy. See https://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_a.htm.
[5] For a review of states in which oil has an outsized economic impact, see this blog: http://economistsoutlook.blogs.realtor.org/2016/03/21/is-california-an-o...
[6]The REALTORS®Buyer Traffic Index provides information on the level of homebuying demand or interest, which may materialize as a contract to purchase or closed sale after two or three months.
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