REALTOR® Confidence: Some Hopeful Signs?

Media outlets are in the business of garnering ratings, subscriptions and advertising revenue. What they often miss, of course, is the story behind the numbers.

Palm Coast, FL – September 27, 2011 – Reports in the media about the state of the existing-home sales (EHS) markets sometimes should carry scare-lines, rather than headlines. Media outlets are in the business of garnering ratings, subscriptions and advertising revenue. What they often miss, of course, is the story behind the numbers. That story is all real estate is local: some housing markets are actually performing well, some are performing poorly, and many are in-between. Median home prices have been moving up and down in a relatively narrow range in many markets; that shows a stabilization trend. However, a review of many of the national media reports gives an overall impression of gloom and doom. Therefore, what do the people most familiar with the nation’s real estate markets think about the current existing-home sales markets?

The REALTORS® Confidence Index measures the strength of the current housing market and expectations about the future. The index is based on information received from a random survey of REALTORS®. Each month participants respond to questions regarding the current and expected demand for homes, price trends, and economic conditions. The answers are then quantified and used to create the confidence index. Responses are assigned weights of 0, 50 or 100. A response of “strong” gets 100 points, while “moderate” is given 50 points, and “weak” is assigned 0 points. The index provides the average score for each question. The questions are designed to capture the effects of existing economic conditions and trends on the real estate business. This index provides REALTORS® with a snapshot of the experiences, sentiments and expectations of their counterparts.

According to the latest REALTORS® Confidence Index survey, REALTORS® currently are somewhat more confident about the EHS markets than they were at this time last year. While there does seem to be a general view that the EHS markets are weaker than has normally been the case in the past, the current level of confidence is a bit better than it has been during much of the past three years.

The REALTORS® Confidence Index for single-family home sales as reported in the July report increased from the previous month’s level (30.8) to 31.3. The index was higher compared to last year’s conditions, when the index registered at 27.4. Also, the index for town-houses increased to 17.2 in July from the previous month’s 16.2. The index for condos remained almost at the same level of 14.0 from June’s 13.9. Both town-house index and condo index registered higher values than last year’s levels at 11.2 and 9.8, respectively.

Comments received from REALTORS® indicate that the EHS markets are still very challenging, and many respondents express some degree of frustration with previous and current levels of distressed properties, pricing, and sales levels. There seems to be a general level of agreement that the outlook for the EHS markets will be strongly dependent on continued economic recovery and job creation.

The outlook for home prices is somewhat more positive. A small majority of respondents (55 percent) expect home prices over the next 12 months to be constant or rising. These observations mirror current developments around the country—a number of markets have achieved stability, while others continue to experience price pressures. Most economic forecasters expect home prices to achieve stability in the next year, some predicting sooner and some predicting later. Still, most analysts – as well as REALTORS® –feel that the future outlook for home prices and sales will continue to be strongly dependent on the economic recovery and job creation.

©National Association of Realtors® – reprinted with permission