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REALTORS CONFIDENCE INDEX SURVEY

Report on the January 2017 Survey

The REALTORS Confidence Index (RCI) report provides monthly information about real estate market
conditions and expectations, buyer/seller traffic, price trends, buyers characteristics, and issues
affecting real estate transactions based on a monthly survey of REALTORS.

The January 2017 report is based on the responses of 3,808 REALTORS, 1,955 of which closed a
sale. 1 Respondents reported on local market conditions experienced in January and the characteristics of
their most recent sale for the month. The data is collected from a random sample of REALTORS and is
viewed to be representative of the sales for the month. NAR Research conducted the online survey from
February 29, 2017. To correct for over- or under- response at the state level, the responses are weighted
by a factor that aligns the sample distribution of responses to the distribution of NAR membership. All
real estate is local: conditions in specific markets vary from the overall national trends presented in this
report. REALTORS may be interested in comparing their markets against the national summary.

The RCI report is an output of the Research Division of the NATIONAL ASSOCIATION of
REALTORS. 2 For questions or information about this report, please email dhale@realtors.org.

Lawrence Yun, Senior Vice President and Chief Economist


Danielle Hale, Managing Director, Housing Research
Gay Cororaton, Research Economist
Meredith Dunn, Research Communications Manager

Research Division
NATIONAL ASSOCIATION of REALTORS
500 New Jersey Avenue, NW
Washington, DC 20001
202.383.1000

1 The survey is sent to 50,000 REALTORS who are selected through simple random sampling. To increase the response rate, the survey is
also sent to respondents in the previous three surveys who provided their email addresses. The number of responses to a specific question
varies because the question may not be applicable to the respondent or because of non-response. To encourage survey participation, eight
REALTORS are randomly selected to receive a gift card.
2 The team acknowledges Jessica Lautz, Managing Director, Survey Research and Communications, Meredith Dunn, Research

Communications Manager, Amanda Riggs, Research Survey Analyst, and Brandi Snowden, Research Survey Analyst, for their inputs in
improving the survey and in editing and disseminating the report. Acknowledgement also goes to Lisa Herceg, Director, Marketing
Research, who sends out the survey to members.
1
Table of Contents

Summary ................................................................................................................................................... 3
I. Market Conditions .............................................................................................................................. 4
REALTORS Reported Strong Buyer Traffic and Tight Supply............................................................ 4
REALTORS Are Generally Optimistic Over the Next Six Months ...................................................... 7
Most Respondents Reported Constant or Higher Prices Compared to One Year Ago............................. 9
REALTORS Expect Modest Price Change in Next 12 Months .......................................................... 11
Properties Typically on the Market for 50 Days .................................................................................... 13
II. Buyer and Seller Characteristics ........................................................................................................ 17
Sales to First-Time Buyers: 33 Percent of Sales .................................................................................... 17
Distressed Sales: Seven Percent of Sales ............................................................................................... 19
Sales for Investment Purposes: 15 Percent of Sales ............................................................................... 20
Cash Sales: 23 Percent of Sales .............................................................................................................. 21
Eighty Percent of First-time Buyers Put Down Less than 20 Percent Downpayment ........................... 21
III. Issues Affecting Transactions ........................................................................................................... 23
Contract Settlement: Financing, Home Inspection, and Appraisals Are Major Issues........................... 23

2
Summary
While local conditions vary, the REALTORS Buyer Traffic Index and the REALTORS Confidence
IndexCurrent Conditions for single-family homes remained above 50 in January 2017, indicating that
more respondents reported strong than weak conditions. Both indices were higher than their levels
one year ago and in the previous month. 3 The REALTORS Seller Traffic Index also increased slightly
from its levels one year ago and in the previous month, but it has remained below 50 since December
2008, indicating that seller activity is still weak.

In January 2017, first-time homebuyers accounted for 33 percent of sales. 4 Amid solid job creation, the
share of first-time homebuyers has been on a modest rise, up from 29 percent in 2014. With fewer new
foreclosures, distressed properties accounted for seven percent of sales, purchases for investment
purposes made up 15 percent of sales, and cash sales accounted for 23 percent of sales. Amid tight
supply, half of properties that sold in January 2017 were on the market for 50 days or less compared to
64 days in January 2016.

Lack of supply and appraisal-related problems were the main issues reported by REALTORS.
Respondents also expressed concern about the impact of rising mortgage rates and economic policy
changes under the Trump administration on the recovery of the housing market. Overall, respondents
remained confident about the outlook over the next six months for the single-family homes, townhomes,
and condominiums markets, with the six-month outlook confidence indices for each of these markets
registering above 50.

January 2017 REALTORS Confidence Index Survey Highlights


Jan-17 Dec-16 Jan-16
RCI Buyer Traffic Index 63 57 59
RCI Seller Traffic Index 41 39 40
RCI Current Conditions: Single-Family Sales 63 62 59
RCI Six-Month Outlook: Single-Family Sales 79 76 75
First-Time Home Buyers, as Percent of Sales 33 32 32
Sales to Investors, as Percent of Sales 15 15 17
Cash Sales, as Percent of Sales 23 21 26
Distressed Sales, as Percent of Sales 7 7 9
Median Days on Market 50 52 64
Sold at Original List Price or Premium, as Percent of Sales 38 34 33
Median Expected Price Growth in Next 12 Months (%) 3.5 3.2 3.4

3
An index greater than 50 indicates the number of respondents who reported strong (index=100) outnumbered those who reported
weak (index=0). An index equal to 50 indicates an equal number of respondents reporting strong and weak market conditions. The
index is not adjusted for seasonality effects.
4 NARs 2016 Profile of Home Buyer and Sellers (HBS) reports that among primary residence home buyers, 35 percent were first-time

home buyers, up from 32 percent in 2015. The HBS surveys primary residence home buyers, while the monthly RCI Survey surveys
REALTORS and also captures purchases for investment purposes and vacation/second homes.
3
I. Market Conditions

REALTORS Reported Strong Buyer Traffic and Tight Supply

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. 5 Homebuying demand is likely being bolstered by sustained job growth, with 2.3 million jobs
added in the last 12 months and 15.8 million jobs generated since February 2010. 6 Future interest rate
increases may also be prompting first-time homebuyers to take advantage of the current mortgage rates.
In the week of January 26, the 30-year fixed mortgage rate averaged 4.17 percent. Mortgage rates are
likely to continue to rise modestly to an average of 4.4 percent in 2017 and 5.0 percent in 2018. 7

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.

REALTORS Buyer and Seller Traffic Indexes


as of January 2017
80
70
60 63
50
40 41
30
20
200801
200806
200811
200904
200909
201002
201007
201012
201105
201110
201203
201208
201301
201306
201311
201404
201409
201502
201507
201512
201605
201610

Buyer Traffic Index Seller Traffic Index

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. 8 Buyer traffic conditions were very strong
only in the state of Washington.

5
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.
6 The last 12 months refers to February 2016 to January 2017. Nearly 8.7 million jobs were lost from January 2008February 2010, so the

gain above previous peak employment is about seven million jobs.


7 NAR forecast. See https://www.nar.realtor/sites/default/files/reports/2016/embargoes/forecast-01-2017-us-economic-outlook-01-30-

2017.pdf
8 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
4
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 homes
that are affordable to buyers. This is consistent with available data on the affordability of active housing
inventory. 9

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,

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.
9
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-and-score
5
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. 10 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. 11

Major Oil Producers Based on Share of State's Oil


70.0% Production to State GDP
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%

2013 2014 2015 2016F*


*Estimate based on Jan-Oct 2016 oil production and 2016 Q1-Q3 GDP.

10Source: U.S. Department of Energy. See https://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_a.htm.


11
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/
6
REALTORS Are Generally Optimistic Over the Next Six Months

The REALTORS Confidence IndexSix-Month Outlook for single-family homes, townhomes, and
condominiums each registered above 50, indicating that more REALTOR respondents expected market
conditions to be strong than weak over the next six months.12

The index for condominiums was at 58 in January 2017 (56 in December 2016; 52 in January 2016), the
highest level since this index was generated in 2008. The approval of H.R. 3700, the Housing
Opportunity Through Modernization Act of 2016, appears to be bolstering homebuying in the
condominium market. 13 Among other measures, the law eases access to FHA condominium financing
by reducing the FHA condominium 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.

REALTORS Confidence IndexSix-Month Outlook


as of January 2017
100
80 79
60 62
40 58
20
0
200801
200805
200809
200901
200905
200909
201001
201005
201009
201101
201105
201109
201201
201205
201209
201301
201305
201309
201401
201405
201409
201501
201505
201509
201601
201605
201609
201701
Single-family Townhome Condominium

In the single-family homes market, the outlook in the next six months is strong to very strong in
nearly all states and in the District of Columbia. 14 Only North Dakota registered with a weak outlook.
In the townhomes and condominiums markets, the outlook is more evenly mixed, from weak to very

12 Respondents are 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.
13The 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
14 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 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 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.
7
strong in most states and in the District of Columbia. Post-election factors may boost the outlook in the
District of Columbia. 15

15
See for example this review: http://economistsoutlook.blogs.realtor.org/2016/10/05/do-elections-affect-the-housing-market-in-
washington-dc/
8
Most Respondents Reported Constant or Higher Prices Compared to One Year Ago

Given the low level of inventory of homes for sale in many areas coupled with strong buyer traffic in
most areas, 88 percent of respondents reported that home prices either remained constant or rose in
January 2017 compared to one year ago (87 percent in December 2016; 90 percent in January 2016). 16

Percent of Respondents Who Reported Constant or


Higher Price Change Compared to One Year Ago
100%
88%
90%

80%

70%

60%

50%

40%
201203
201206
201209
201212
201303
201306
201309
201312
201403
201406
201409
201412
201503
201506
201509
201512
201603
201606
201609
201612

16Respondents are asked, Considering your average home transaction from the past year, at what average price would the very same home
be sold today?

9
Because conditions are competitive for buyers, offers continue to be high relative to asking price; 38
percent of properties sold at or above the original listing price (34 percent in December 2016; 33 percent
in January 2016). When this survey first gathered this information in January 2012, only 28 percent of
properties sold at or above the original list price. Because this measure tends to rise in the spring and
summer, we expect the share of properties sold at or above listing price to increase in the months ahead.

Percent of Properties Sold at Original Price or at Net


Premium from the Listing Price as of January 2017
45%
40%
38%
35%
30%
25%
20%
201212
201303
201306
201309
201312
201403
201406
201409
201412
201503
201506
201509
201512
201603
201606
201609
201612
Properties that are on the market for a shorter time tend to sell at the original list price or at a premium.
Among transactions that closed in January 2017, 50 percent of properties that were on the market for
less than one month sold at the original list price or at premium, while only 14 percent of properties that
were on the market for 12 months or longer sold at the original list price or at a premium.

Price Discount or Premium from the Original List Price by Days on


Market for Transactions That Closed in January 2017
100% 9% 6% 6% 2% 2% 4% 3% 3%
19% 9% 14% 11%
21% 20% 16%
80% 22%
41%
60%
40% 79% 78% 80% 88% 86% 86%
71% 73%
20% 50%

0%
Less than 1 to less 2 to less 3 to less 4 to less 5 to less 6 to less 9 to less 12
1 month than 2 than 3 than 4 than 5 than 6 than 9 than 12 months or
months months months months months months months more

Sold at a Discount Sold at Original Listing Price Sold at a Premium

10
REALTORS Expect Modest Price Change in Next 12 Months

Among REALTORS who responded to the January 2017 survey, the median expected home price
change in the next 12 months was 3.5 percent, which means that half of respondents expect home prices
to increase by less than 3.5 percent over the next 12 months while half of respondents expect home
prices to increase by more than 3.5 percent in that time.

The map below shows the median expected price change of the respondents in the next 12 months at the
state level. 17 The states of Washington, Oregon, and Colorado have the highest median expected price
growth at above four to five percent. The oil-producing states of Alaska, North Dakota, and West
Virginia have the lowest median expected price change; respondents expect a slight decline in Alaska
home prices and growth of less than two percent in North Dakota and West Virginia home prices in the
next 12 months.

Looking at the values over time in selected states, the median expected price change appears to be
increasing again from what was expected in the middle of 2016, indicating that respondents expect
demand to remain strong. In more than half of states, expected price change exceeds the price growth
that was expected at the end of January 2016, even as home prices continue to rise. 18

17The median expected price change is a measure that represents the middle value of the distribution of responses.
18To increase the number of observations for each state, the analysis is based on a 3-month rolling period. The states shown in these charts
are those with approximately 150 observations.
11
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0

0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Oct2012-Dec2012 Oct2012-Dec2012
Jan2013-Mar2013 Jan2013-Mar2013
Apr2013-Jun2013 Apr2013-Jun2013
Jul2013-Sep2013 Jul2013-Sep2013
Oct2013-Dec2013 Oct2013-Dec2013
Jan2014-Mar2014 Jan2014-Mar2014
Apr2014-Jun2014 Apr2014-Jun2014
Jul2014-Sep2014 Jul2014-Sep2014
Oct2014-Dec2014 Oct2014-Dec2014
Jan2015-Mar2015 Jan2015-Mar2015
Apr2015-Jun2015 Apr2015-Jun2015
Jul2015-Sep2015 Jul2015-Sep2015
Oct2015-Dec2015 Oct2015-Dec2015
Jan2016-Mar2016 Jan2016-Mar2016
Apr2016-Jun2016 Apr2016-Jun2016
Next 12 Months in Selected West States

Jul2016-Sep2016
Jul2016-Sep2016
Next 12 Months in Selected Midwest States

Oct2016-Dec2016
Oct2016-Dec2016
REALTORS Median Expected Price Change Over the
REALTORS Median Expected Price Change Over the

IL
AZ
CA

CO
OR

MI
WA

WI
OH

12
REALTORS Median Expected Price Change Over the
Next 12 Months in Selected South States
8.0
FL
7.0
6.0 GA
5.0
4.0 NC
3.0
2.0 SC
1.0 TN
0.0
VA
Oct2012-Dec2012

Oct2013-Dec2013

Oct2014-Dec2014

Oct2015-Dec2015

Oct2016-Dec2016
Jan2013-Mar2013

Jan2014-Mar2014

Jan2015-Mar2015

Jan2016-Mar2016
Jul2013-Sep2013

Jul2014-Sep2014

Jul2015-Sep2015

Jul2016-Sep2016
Apr2013-Jun2013

Apr2014-Jun2014

Apr2015-Jun2015

Apr2016-Jun2016
TX

REALTORS Median Expected Price Change Over the


Next 12 Months in Selected Northeast States
5.0
4.0
MA
3.0
NJ
2.0
NY
1.0
PA
0.0
Oct2012-Dec2012

Oct2013-Dec2013

Oct2014-Dec2014

Oct2015-Dec2015

Oct2016-Dec2016
Jan2013-Mar2013

Jan2014-Mar2014

Jan2015-Mar2015

Jan2016-Mar2016
Jul2013-Sep2013

Jul2014-Sep2014

Jul2015-Sep2015

Jul2016-Sep2016
Apr2013-Jun2013

Apr2014-Jun2014

Apr2015-Jun2015

Apr2016-Jun2016

Properties Typically on the Market for 50 Days

Properties stayed on the market for fewer days in January 2017 compared to one year ago, amid strong
demand and tight supply. Nationally, properties sold in January 2017 were typically on the market for 50
days (52 days in December 2016; 64 days in January 2016). 19 The length of time properties are on the
market has fallen as demand has outpaced the inventory of homes for sale. In 2011, properties were
typically on the market for 97 days.

19
Respondents are asked, For the last house that you closed in the past month, how long was it on the market from listing time to the time
the seller accepted the buyers offer? The median is the number of days at which half of the properties stayed on the market. In generating
the median days on market at the state level, we use data for the last three surveys to have close to 30 observations. Small states such as
AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations.
13
Median Days on Market of Sales Reported by
REALTOR Respondents as of January 2017
200 All: 50 Foreclosed: 51 Short sale: 108 Non-distressed: 49
150

100

50

0
201105
201108
201111
201202
201205
201208
201211
201302
201305
201308
201311
201402
201405
201408
201411
201502
201505
201508
201511
201602
201605
201608
201611
All Foreclosed Short sale Non-distressed

Nationally, 38 percent of properties that sold in January 2017 were on the market for less than a month
(37 percent in December 2016; 32 percent in January 2016). 20 Only 11 percent of properties were on the
market for six months or longer (11 percent in December 2016; 14 percent in January 2016).

Percentage Distribution of Time on Market of Sales Reported by


REALTOR Respondents as of January 2017 (In Months)
50%
38%
40%

30%
17%
20% 15%
10%
10% 5% 5%
5% 3% 3%
0%
<1 1 to <2 2 to <3 3 to <4 4 to <5 5 to <6 6 to <9 9 to <12 12

201601 201612 201701

Properties that sold in November 2016, December 2016, and January 2017 were typically on the market
for less than 31 days in Washington, Oregon, Utah, Alaska, Kansas, Texas, Tennessee, and the District
of Columbia. Looking at the values over the last few years, in most states the median length of time that
properties stay on the market has trended downwards, though the graphs also show that days on market
in some states fluctuate seasonally. 21 Local conditions vary, and the data is provided for REALTORS
who want to compare local markets against other states and the national summary.

20Days on market usually refers to the time from listing date to contract date.
21
To increase the number of observations for each state, the analysis is based on a 3-month rolling period. The states shown in these charts
are those with approximately 150 observations.
14
20
40
60
80

0
100
120
201103-201105
201107-201109
201111-201201
201203-201205
201207-201209
201211-201301
201303-201305
201307-201309
201401-201403
201405-201407
201409-201411
201501-201503
201505-201507
201509-201511
201601-201603
REALTORS in Selected West States

201605-201607
Median Days on Market of Sales Reported by

201609-201611 AZ
CA

CO
WA

15
20
40
60
80
20
40
60
80

0
0

100
120
140
160
180
100
120
140
160
180

201103-201105 201103-201105
201107-201109 201107-201109
201111-201201 201111-201201
201203-201205 201203-201205
201207-201209 201207-201209
201211-201301 201211-201301
201303-201305 201303-201305
201307-201309 201307-201309
201401-201403 201401-201403
201405-201407 201405-201407
201409-201411 201409-201411
201501-201503 201501-201503
201505-201507 201505-201507
201509-201511 201509-201511
201601-201603 201601-201603
REALTORS in Selected South States
REALTORS in Selected Midwest States

201605-201607 201605-201607
Median Days on Market of Sales Reported by
Median Days on Market of Sales Reported by

201609-201611 201609-201611
IL

FL

TX
VA
NC
MI

GA
WI
OH

16
Median Days on Market of Sales Reported by
REALTORS in Selected Northeast States
160
140
120
100 MA
80
60
40 NJ
20
0
NY
201103-201105
201107-201109
201111-201201
201203-201205
201207-201209
201211-201301
201303-201305
201307-201309
201401-201403
201405-201407
201409-201411
201501-201503
201505-201507
201509-201511
201601-201603
201605-201607
201609-201611
PA

II. Buyer and Seller Characteristics


Sales to First-Time Buyers: 33 Percent of Sales

Sales to first-time homebuyers accounted for 33 percent of residential sales in January 2017 (32 percent
in December 2016; 32 percent in January 2016. Sustained job growth and improving incomes along with
the aging of the Millennial generation are likely underpinning the continued, albeit modest, increase in
homebuying by first-time buyers. The anticipation of further increases in interest rates may also have
prompted first-time buyers to enter the market. 22

22Mortgage rates in this report refer to the average contract rates on 30-year conventional mortgages reported by Freddie Mac. The average
30-year mortgage rate was 3.54 percent in the week of November 3, 2016. It broke above four percent, to 4.03 percent, in the week of
November 24, and it climbed to 4.32 percent in the week of December 29. Since that time, rates have eased somewhat. The average rate
stood at 4.17 percent in the week of February 9, 2017, with rates likely to remain above four percent during 2017.
17
First-time Buyers as Percent of Residential Market
as of January 2017
60%
50%
40%
33%
30%
20%
10%
0%
200810
200902
200906
200910
201002
201006
201010
201102
201106
201110
201202
201206
201210
201302
201306
201310
201402
201406
201410
201502
201506
201510
201602
201606
201610
Number of Households Headed by 25-34 Year Olds
(in Millions)
20.5

20.0 20.1 20.0


20.0
20.0 19.8

19.4 19.5
19.5 19.3 19.3
19.2 19.3
19.2 19.1
19.0 19.1
19.0
19.0

18.5

18.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Census Bureau, Current Population Survey, downloaded from Haver Analytics

Buyers 34 years old and under, who are likely to be first-time buyers, accounted for 28 percent of
residential buyers in January 2017 (30 percent in December 2016; 28 percent in January 2016). The
share of buyers 34 and under has been on a gradual uptrend from the 26 percent share in July 2013 when
this information was first collected in the survey. 23

23
NARs 2016 Profile of Home Buyer and Sellers (HBS) reports that among primary residence home buyers, 28 percent were 18-34 years
old. The HBS surveys primary residence home buyers, while the monthly RCI Survey surveys REALTORS and also captures purchases
for investment purposes and vacation/second homes.
18
Age Distribution of Buyers for Sales Reported by
REALTOR Respondents as of January 2017
60%
50% 48%
40%
28%
30%
25%
20%
10%
0%
201307
201311
201407
201409
201411
201501
201503
201505
201507
201509
201511
201601
201603
201605
201607
201609
201611
201701
Age 34 and under Age 35 to 55 Age 56 and over

Homebuyers who were renting prior to their recent home purchase accounted for 42 percent of sales in
January 2017 (39 percent in December 2016; 40 percent in January 2016). The fraction of buyers who
were renting prior to their recent home purchase has increased from the 36 percent share in December
2014 when this information was first collected. 24 At the same time, the share of buyers who were living
in their own home at the time of their recent home purchase has decreased.

Living Status of Homebuyers at Time of Home Purchase as of


January 2017
60% 55%
49%
40% 36% 42%

20% 9%
9%
0%
201408
201410
201412
201502
201504
201506
201508
201510
201512
201602
201604
201606
201608
201610
201612

Rents an apartment or house


Lives in own home
Lives with parents, relatives, or friends

Distressed Sales: Seven Percent of Sales

Distressed sales accounted for seven percent of sales in January 2017 (seven percent in December 2016;
nine percent in January 2016). Foreclosed properties were five percent of residential sales, while short

24
NARs 2016 Profile of Home Buyer and Sellers (HBS) reports that among primary residence home buyers, 41 percent rented an
apartment or house. The HBS surveys primary residence home buyers, while the monthly RCI Survey surveys REALTORS and also
captures purchases for investment purposes and vacation/second homes.
19
sales were only two percent of residential sales. 25 With rising home values, improved economic
conditions, and fewer foreclosures, the share of sales of distressed properties has generally continued to
decline. Distressed sales accounted for about a third to half of sales until 2012 when they began to fall
below this level.

Distressed Sales as Percent of Residential Sales


as of January 2017
60%
50%
Foreclosed: 5% Short sale: 2%
40%
30%
20%
10%
0%
200810
200902
200906
200910
201002
201006
201010
201102
201106
201110
201202
201206
201210
201302
201306
201310
201402
201406
201410
201502
201506
201510
201602
201606
201610
Foreclosed Short sale

Sales for Investment Purposes: 15 Percent of Sales

Investment sales made up 15 percent of sales in January 2017 (15 percent in December 2016; 17 percent
in January 2016). Purchases for investment purposes have generally been on the decline since 2011
2012 when investment sales accounted for 20 percent of sales. Purchasing for investment has become
less attractive with fewer distressed sales on the market and with home prices rising.

Sales for Investment Purpose as Percent of Residential


Sales as of January 2017
30%
25%
20%
15%
15%
10%
5%
0%
200810
200903
200908
201001
201006
201011
201104
201109
201202
201207
201212
201305
201310
201403
201408
201501
201506
201511
201604
201609

25
The survey asks respondents who had a sale in the month to report on the characteristics of the most recent sale closed.
20
Cash Sales: 23 Percent of Sales

In January 2017, 23 percent of sales were cash sales ( 21 percent in December 2016; 26 percent in
January 2016). Buyers of homes for investment purposes, distressed sales, second homes, and foreign
clients are more likely to pay cash than first-time home buyers. As the shares of investment and
distressed sales have declined, so has the share of cash sales.

Cash Sales as Percent of Residential Sales


as of January 2017
40%
35%
30%
23%
25%
20%
15%
10%
5%
0%
200810
200902
200906
200910
201002
201006
201010
201102
201106
201110
201202
201206
201210
201302
201306
201310
201402
201406
201410
201502
201506
201510
201602
201606
201610
Percent of All-Cash Sales By Type of Buyer
in January 2017
70% 59% 57%
60%
47% 45%
50%
40%
30%
20% 13%
10% 6%
0%
Investor International Distressed Second Home Relocation First-time
Sale Buyer
*The RCI survey captures only non-U.S. citizens whose permanent residence is in another country
(Type A). NAR has a separate survey on foreign buyers that captures both Type A buyers and non-
U.S. citizens who reside in the United States on work, student, or other types of visas (Type B).

Eighty Percent of First-time Buyers Put Down Less than 20 Percent Downpayment

More first-time homebuyers take advantage of a low downpayment loan compared to all homebuyers.
Among all buyers whose transaction closed in January 2017, 62 percent of those who obtained a
mortgage made a downpayment of less than 20 percent. Among first-time homebuyers who obtained a

21
mortgage and whose transactions closed in November 2016, December 2016, and January 2017, 80
percent made a downpayment of less than 20 percent. 26

Share of Buyers Obtaining a Mortgage Who Put in Less than 20


Percent Downpayment as of January 2017*
90%

80% 80%

70%

60% 62%

50%
201106
201109
201112
201203
201206
201209
201212
201303
201306
201309
201312
201403
201406
201409
201412
201503
201506
201509
201512
201603
201606
201609
201612
All Buyers First-time Buyers*
*The data reported for the month is a rolling three-month figure.

Among first-time homebuyers, 65 percent put down a zero to six percent downpayment, a decrease from
the 74 percent share in June 2009 when NAR started collecting this information in the RCI Survey. The
Federal Housing Administration (FHA) and the Government Sponsored Enterprises (GSEs) have
implemented policies to make credit more widely available, such as FHAs reduction of its annual
mortgage insurance premiums and the Government Sponsored Enterprises (GSEs) acceptance of three
percent downpayment mortgages. However, the impact of these measures in attracting first-time
homebuyers appears to be modest for a variety of reasons. Lack of information about these products
may be one reason. In fact, NARs 2016 Q3 Housing Opportunities and Market Experience (HOME)
Survey found that only 13 percent of those aged 34 or under believe they need a downpayment of five
percent or less. 27 Additionally, although low downpayment loans are available, some buyers may want
to save for a bigger downpayment to meet underwriting standards (e.g., debt-to-income ratios, loan-to-
value ratios), save on mortgage insurance, or get a lower interest rate.

26 The estimate for first-time homebuyers is based on a 3-month period to increase the sample size.
27 See: http://www.realtor.org/reports/2016-q3-homeownership-opportunities-and-market-experience-home-survey.
22
Share of First-time Buyers Obtaining a Mortgage Who Put in
a Zero to Six Percent Downpayment as of January 2017*
80%
75%
70%
65% 65%
60%
55%
50%
200906
200912
201004
201008
201012
201104
201108
201112
201204
201208
201212
201304
201308
201312
201404
201408
201412
201504
201508
201512
201604
201608
201612
*The data reported for the month is a rolling three-month figure.

III. Issues Affecting Transactions


Contract Settlement: Financing, Home Inspection, and Appraisals Are Major Issues

Most contracts are settled on time. Among respondents who reported they had a contract that went into
settlement or was terminated over the period November 2016, December 2016, and January 2017, 67
percent reported that the contracts were settled on time, 29 percent had a delayed settlement, and five
percent reported that the contract was terminated.

How Sales Contracts Were Settled


100% 5%
80% 29%
60%
40% 67%
20%
0%
201501-201503
201502-201504
201503-201505
201504-201506
201505-201507
201506-201508
201507-201509
201508-201510
201509-201511
201510-201512
201511-201601
201512-201602
201601-201603
201602-201604
201603-201605
201604-201606
201605-201607
201606-201608
201607-201609
201608-201610
201609-201611
201610-201612
201611-201701

Contract was terminated


Contract was delayed but eventually went into settlement
Contract was settled on time
* Based on the respondent's most recent contract that went into settlement or was terminated during
this three-month period.

Among contracts that had a delayed settlement (29 percent), 38 percent faced issues related to obtaining
financing and 22 percent faced appraisal issues. Regarding appraisal issues, respondents reported facing
appraisal delays due to a shortage of appraisers, valuations that are not in line with market conditions,
23
and out-of-town appraisers who are not familiar with local conditions. In NARs Survey of Mortgage
Originators, 55 percent who took part in the survey reported some level of issues getting appraisals. 28
Other specific issues that led to delays involved titling, sale contingencies, problems related to distressed
sales, home/hazard/flood insurance issues, and the buyer losing a job.

Problems Encountered for Contracts That Were Delayed But Eventually


Went Into Settlement in November 2016January 2017*
(Delayed Contracts Represent 29 Percent of Closed or Terminated
Contracts)
Issues related to obtaining financing 38%
Appraisal issues 22%
Home inspection/environmental issues 13%
Titling/deed issues 11%
Contingencies stated in the contract 8%
Issues in buy/sell distressed property 6%
No problems encountered 5%
Home/hazard/flood insurance issues 2%
Buyer lost job 1%
Other 20%
*Based on the respondent's most recent contract that went into settlement or was terminated during this
period. Percentages will not sum to 100 percent because multiple responses are allowed. "Other" includes
buyer or seller backing out, price disagreement, non-price disagreement, HOA issues, builder delays,
delays related to complying with regulation, etc.

Among Contracts That Had Delayed Settlement, Percent of


Contracts with Issues Related to Financing and Appraisal
50%
45%
40% 40%
35% 38%
30%
25%
20% 22%
15% 18%
10%
201502-201504
201503-201505
201504-201506
201505-201507
201506-201508
201507-201509
201508-201510
201509-201511
201510-201512
201511-201601
201512-201602
201601-201603
201602-201604
201603-201605
201604-201606
201605-201607
201606-201608
201607-201609
201608-201610
201609-201611
201610-201612
201611-201701

Appraisal issues Issues related to obtaining financing

Based on information collected from the most recent sale of REALTOR respondents ,the median days
to close a contract was 40 days in January 2017 (40 days in December 2016; 42 days in January 2016).
In July 2015 when NAR collected this information prior to the implementation of TRID/Know Before
You Owe, the median days to close was 36 days.

28Ken Fears, 2016 Survey of Mortgage Originators, Fourth Quarter, Economists Outlook Blog. See
http://economistsoutlook.blogs.realtor.org/2017/02/07/survey-of-mortgage-originators/
24
Median and Average Days to Close a Contract
50
46
45 44
40 40
42
35
30
25
201507
201508
201509
201510
201511
201512
201601
201602
201603
201604
201605
201606
201607
201608
201609
201610
201611
201612
201701
Average Median

Among contracts that were terminated (five percent), issues related to home inspections, obtaining
financing, and appraisal were the major causes of termination.

Problems Encountered for Contracts That Were Terminated


in November 2016January 2017*
(Terminated Contracts Represent Five Percent of
Closed or Terminated Contracts)
Home inspection/environmental issues 29%
Issues related to obtaining financing 20%
Appraisal issues 12%
Contingencies stated in the contract 10%
No problems encountered 8%
Issues in buy/sell distressed property 5%
Buyer lost job 3%
Home/hazard/flood insurance issues 2%
Titling/deed issues 0%
Other 21%
*Based on the respondent's most recent contract that went into settlement or was terminated during this period.
Percentages will not sum to 100 percent because multiple responses are allowed. "Other" includes buyer or seller backing
out, price disagreement, non-price disagreement, HOA issues, builder delays, etc.

25
The NATIONAL ASSOCIATION of REALTORS, The Voice for Real Estate, is Americas largest
trade association, representing over 1 million members, including NARs institutes, societies, and
councils, involved in all aspects of the real estate industry. NAR membership includes brokers,
salespeople, property managers, appraisers, counselors and others engaged in both residential and
commercial real estate. The term REALTOR is a registered collective membership mark that
identifies a real estate professional who is a member of the National Association of REALTORS
and subscribes to its strict Code of Ethics. Working for America's property owners, the National
Association provides a facility for professional development, research, and exchange of information
among its members, and to the public and government for preserving the free enterprise system and
the right to own real property.

The Mission of the NATIONAL ASSOCIATION of REALTORS Research Division is to collect


and disseminate timely, accurate, and comprehensive real estate data and to conduct economic
analysis in order to inform and engage members, consumers, policy makers, and the media in a
professional and accessible manner.

To find out about other products from NARs Research Division, visit
www.REALTOR.org/research-and-statistics

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NATIONAL ASSOCIATION of REALTORS


Research Division
500 New Jersey Avenue, NW
Washington, DC 20001
202.383.1000

26