The broader U.S. economy has been seeing some positive signs over the past several months, including, but not limited to lower unemployment rates, lower mortgage interest rates, and the Obama administration’s efforts to make mortgages more accessible to consumers. This has resulted in increased confidence among real estate professionals, as they look upbeat when considering the housing market climate for the coming months.
The National Association of Realtors’ December 2014 Realtors Confidence Index corroborated the above statement, reporting that realtors are indeed looking forward to good things in the first six months of 2015. The six-month outlook for the single-family home space moved up from 60 to November to 67 in December, with Colorado, North Dakota, and Texas having the strongest outlooks for individual states. A score of 50 means that realtors have a strong, or upbeat outlook, as opposed to a weak, or pessimistic one; higher scores mean better on the NAR’s Realtors Confidence Index.
“Falling oil prices means more money into consumers’ pockets, which along with reasonable interest rates, should be positive for the housing outlook in 2015,” said NAR chief economist Lawrence Yun in a statement. “However, realtors in states with greater dependence on the oil and gas industry cautioned about the effect of continued drop in oil prices on employment and its impact on housing.”
However, the NAR also noted that realtors were not as confident about the townhome and condominium space. Confidence levels for townhomes and condos remained under 50 in December 2014, with the NAR attributing this to stringent eligibility regulations from the Federal Housing Administration.
Furthermore, NAR reported that buyer and seller activity in several metropolitan markets had enjoyed some improvement in December 2014, though figures were still lower than they were in December 2013. Overall, NAR said that demand still outpaces supply, even with supply improving and coming closer to finding equilibrium with demand. As for home prices, NAR said that price hikes continued to moderate in December; 47 percent of realtors surveyed said that pricing of average home transactions had ticked up year-over-year in the last month of 2014. Median home pricing as of November 2014 was $205,300.
“A moderation in home price growth is a boon for homebuyers, especially first-time buyers,” Yun commented, referring to home price trends. “Realtors have reported about the lack of ‘affordable’ housing in many areas as home prices rebounded starting in 2012.” Rapid home price hikes, while definitely a boon to existing homeowners, especially those who were hitherto underwater, have been mostly trouble for would-be home buyers, particularly during the time that prices were still appreciating in the double digits.
Most realtors believe home prices may only increase “modestly” over the next 12 months, with an expected appreciation of 3.2 percent. Florida, Nevada, and the District of Columbia have the highest expected price hikes, at around 4 to 5 percent. In Midwest states such as North Dakota and Oklahoma, price growth may be more restrained, due to ongoing concerns about plummeting oil prices and how they may affect the real estate space.