REALTORS®reported stronger homebuying demand in 2016 compared to 2015, according to the December 2016 REALTORS® Confidence Index Survey Report, a monthly survey of REALTORS® about their sales activity and local market conditions. For the year 2016, the REALTORS® Buyer Traffic Index registered at 63 (60 in 2015), indicating that more respondents viewed buyer traffic conditions as “strong” rather than “weak.” Homebuying demand is likely being bolstered by sustained job and income growth, with approximately six million net jobs gained since the recession that ended in 2009.
Meanwhile, home selling activity continued to be weak. For the year 2016, the REALTORS® Seller Traffic Index registered at 43 (40 in 2015), indicating that more respondents viewed seller traffic conditions as “weak” rather than “strong.”. In spite of a small increase from 2015, supply conditions have remained largely tight in many areas, with the index registering below 50 since November 2008.
Looking back historically, while the REALTORS® Seller Traffic Index has not registered above 50 since tracking began, from 2009 to 2011 the REALTORS® Seller Traffic Index exceeded the REALTORS® Buyer Traffic Index. Starting in 2012, as the housing market recovery began to gain momentum, the REALTORS® Buyer Traffic Index grew at a faster pace than the REALTORS® Seller Traffic Index by increasingly large margins in the last three years.
During October—December 2016, the REALTORS® Buyer Traffic Index indicates that buyer traffic conditions can be characterized as “moderate” to “very strong” in many states except in the few states where buyer traffic was “weak”. Buyer traffic conditions were “very strong” only in the state of Washington and the District of Columbia.
During the same period, the REALTORS® Seller Traffic Index indicates seller traffic conditions were “weak” in most states, although 14 states had “moderate” seller traffic conditions. Only the District of Columbia had “strong” seller traffic conditions. Respondents reported that demand is strong, but there is a severe lack of supply, especially of homes that are affordable to buyers.
Employment conditions affect the supply and demand for housing. The chart that follows shows the change in non-farm employment from November 2015 to November 2016 by state. Employment growth was strongest in Washington and Florida, and buyer traffic was “moderate” to “very strong” in these states. Non-farm employment contracted in the oil-producing states of North Dakota, Wyoming, Kansas, Oklahoma, New Mexico, Louisiana, and Mississippi. In some of these states, the job cutbacks have led to “moderate” seller traffic conditions, based on the REALTORS® Seller Traffic Index. Texas has been more resilient than other oil-producing states, with employment growing slightly above the national average.
The author acknowledges Danielle Hale, Meredith Dunn, and Amanda Riggs for their comments. Any errors are attributable to the author.
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.
 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.
 Source: U.S. Department of Energy. See https://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_a.htm.
 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-oil-producing-state/
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