REALTORS CONFIDENCE INDEX

Report on the September 2014 Survey

NATIONAL ASSOCIATION OF REALTORS
Research Department
Lawrence Yun, Senior Vice President and Chief Economist





The REALTORS Confidence Index (RCI) Report provides monthly information about
real estate market conditions and expectations, buyer/seller traffic, price trends, buyer profiles,
and issues affecting real estate based on data collected in a monthly survey of REALTORS.
The September 2014 report is based on the responses of 4,067 REALTORS about their
transactions in September 2014.
1
Responses were received from October 2-9, 2014. Questions
about the characteristics of the buyer and the sale are based on the respondents last transaction
for September which, on a combined basis, are viewed to be representative of the sales for the
month. All real estate is local: conditions in specific markets may vary from the overall national
trends presented in this report.
The Report also contains commentaries by the Research Department on recent economic
data releases and policies affecting housing.

Lawrence Yun, Senior Vice President and Chief Economist
Jed Smith, Managing Director, Quantitative Research
Gay Cororaton, Research Economist
Meredith Dunn, Research Communications Manager



1
The survey was sent to 50,000 REALTORS who were selected through simple random sampling. To
increase the response rate, the survey is also sent to respondents in the previous three surveys and who provided
their email addresses. The number of responses to a specific question varies because the question is not applicable
to the respondent or because of non-response. To encourage survey participation, eight REALTORS are selected
through simple random sampling drawing to receive a gift card.


Table of Contents
SUMMARY .................................................................................................................................................. 1
I. Market Conditions .................................................................................................................................... 2
REALTORS Confidence Dipped in September 2014 ........................................................................... 2
REALTORS Buyer and Seller Traffic Indexes Declined in September 2014 ....................................... 5
Home Price Growth Continued to Moderate in September 2014 ............................................................. 7
REALTORS Expect Prices to Increase Modestly in the Next 12 Months ............................................ 9
Properties Stayed Longer on the Market at 56 Days in September 2014 ................................................. 9
II. Buyer and Seller Characteristics ............................................................................................................ 11
Sales to First Time Buyers: 29 Percent of Sales .................................................................................... 11
Sales for Investment Purposes: 14 Percent of Sales ............................................................................... 12
Second-home Buyers and Relocation Sales ............................................................................................ 13
Distressed Sales: 10 Percent of Sales ...................................................................................................... 14
Cash Sales: 24 Percent of Sales ............................................................................................................ 15
First time Home Buyers Who Put Down Low DownPayment: 64 Percent ......................................... 16
International Transactions: About 2 Percent of Residential Market ...................................................... 17
Rent Prices for Residential Properties .................................................................................................... 18
III. Current Issues ........................................................................................................................................ 19
Credit Conditions Remain Tight ............................................................................................................ 19
Reasons For Not Closing A Sale in September 2014 ............................................................................. 20
IV. Commentaries by NAR Research ......................................................................................................... 21
Affordability in Monthly Mortgage Payments ........................................................................................ 21
Foot Traffic Diffusion Index Continues to Increase in September ......................................................... 23
Median Age of Home Buyers: 2003-2013 .............................................................................................. 24








Page | 1

SUMMARY

REALTORS assessment of market conditions in September and their outlook for the
next six months turned less sanguine in September compared to August. The confidence indexes
for current conditions and the six-month outlook and the buyer and seller traffic indexes declined
in September compared to August and the same month last year. REALTORS continued to
report about the difficulty of qualifying for a loan under more stringent credit eligibility
standards. Although mortgage rates continue to be the lowest in decades and homes are still more
affordable today compared to the years prior to the Great Recession, REALTORS reported
that there are fewer affordable homes for sale for the first-time buyer. Adding an extra
financial burden is the effective increase in insurance payments for FHA-insured loans.
Obtaining FHA financing for condominiums that are the entry points for home ownership has
also remained a challenge. Also, there are now fewer distressed properties on the market.
Given all of these factors, first-time home buyers continued to account for less than a third of the
market. With prices rising faster than rents, the share of sales for investment purposes continued
to come below last years levels. With more inventory from new construction, listings of existing
homes stayed longer on the market. REALTOR respondents expected a modest price increase
in the coming 12 months. The uncertainty about the flood insurance rate increase continued to
hold down activity in coastal states.
September 2014 REALTORS Confidence Index Survey Highlights
Sep 2014 Aug 2014 Sep 2013
RCI Current Conditions: Single Family Sales /1 51 60 60
RCI- 6 Month Outlook: Single Family Sales /1 53 61 59
RCI Buyer Traffic Index /1 44 55 55
RCI-Seller Traffic Index /1 39 44 43
First-time Buyers, as Percent of Sales (%) 29 29 28
Sales to Investors, as Percent of Sales (%) 14 12 19
Cash Sales, as Percent of Sales (%) 24 23 33
Distressed Sales, as Percent of Sales (%) 10 8 14
Median Days on Market 56 53 50
Median Expected price growth in next 12 months (%) 3.1 3.5 3.9
/1 An index of 50 indicates a balance of respondents having weak(index=0) and strong (index=100)
expectations. An index above 50 means there are more respondents with strong than weak expectations. The
index is not adjusted for seasonality effects.






Page | 2

I. Market Conditions
REALTORS Confidence Dipped in September 2014

REALTORS increasingly reported a weakening of current market conditions across all
property types in September 2014 compared to August 2014 . Respondents noted that the market
typically perks up in September after a seasonal slack in preparation for the school opening, but
reports indicated a flatter rebound this year. In the single family market, the REALTORS
Confidence Index - Current Conditions for single family homes dipped to 51 (60 in August). An
index above 50 indicates that there are more respondents who viewed their markets as strong
compared to those who view them as weak.
2
The indexes for townhouses/duplexes and
condominiums continued to trend at below 50.



Confidence about the outlook for the next six months also broadly weakened in
September compared to August. The REALTORS Confidence Index - Six-month Outlook Index
for single family homes fell to 53 (61 in August). The indexes for townhouses and
condominiums, which are at levels below 50, slid further down.



2
An index of 50 delineates moderate conditions and indicates a balance of respondents having
weak(index=0) and strong (index=100) expectations or all respondents having moderate (=50) expectations.
The index is calculated as a weighted average using the share of respondents for each index as weights. The index is
not adjusted for seasonality effects.
51
35
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REALTORS Confidence Index - Current Conditions--
as of Sep 2014 RCI Survey
(50="Moderate" Conditions)
SF Townhouse Condo

Page | 3



Difficulties in obtaining a mortgage under tighter underwriting standards and the
decreased supply of affordable homes were the major major factors cited by respondents that
are pulling down the recovery. In addition to tighter underwriting standards, respondents also
reported that the effective increase in mortgage insurance premium payments arising from the
upfront payment and payments that extend over the life of the loan have made a home purchase
less affordable and closing costs harder to cover. Financing for condominiums remains difficult
to obtain because of FHA financing eligibility regulations for condominiums relating to
occupancy guidelines. The uncertainty about the cost of flood insurance continued to adversely
affect sales.

The graphs present information on REALTOR confidence on a state-by-state basis. By
state
3
, the market outlook for single family homes ws strongest in North Dakota and the District
of Columbia (red). In the market for townhomes and condominiums, the market outlook was
strong in Texas, North Dakota, Colorado, and Nebraska, where strong economic growth
underpinned by the oil industry was happening. In Florida, where prices still have not fully
recovered, investors -- including international buyers-- are still propping up demand. The
D.C.area remained a hot market for condominium and townhouse properties (index greater than
75).





3
The market outlook for each state is based on data for the last 3 months to generate enough observations for
each state.
53
39
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REALTORS Confidence Index - Six Month Outlook--
as of Sep 2014 RCI Survey
(50="Moderate" Outlook)
SF Townhouse Condo

Page | 4

REALTORS(c) Confidence Index: Outlook in Next Six Months for Single-Family Homes
Based on July 2014-September 2014 RCI Surveys


REALTORS(c) Confidence Index: Outlook in Next Six Months for Townhouses
Based on July 2014-September 2014 RCI Surveys


Page | 5

REALTORS(c) Confidence Index: Outlook in Next Six Months for Condominiums
Based on July 2014-September 2014 RCI Surveys



REALTORS Buyer and Seller Traffic Indexes Declined in September 2014

For the first time since January 2012, the Buyer Traffic Index which captures on the
aggregate how REALTORS viewed traffic conditions in their markets dropped to 44 in
September (55 in August). An index below 50 indicates that more REALTOR respondents
viewed traffic conditions as weak compared to those who viewed conditions as strong. The
Seller Traffic Index dipped to 39 ( 44 in August). Based on comments provided by respondents
about their local market conditions, the difficulty of obtaining financing under tighter
underwriting guidelines and and inventory of fewer affordable homes are major factors keeping
buyers at the sidelines. In coastal areas, uncertainty about the flood zone insurance rates and
mapping were reported as continuing to keep buyers at bay.


Page | 6



By state
4
, buyer traffic was strongest in North Dakota and in D.C. as well as states in the
West, South, and in the Great Lakes. Buyer traffic was generally weak in many states in the
North East and Mid-Atlantic . Seller traffic remained generally weak in many states except for
North Dakota and the nearby states of Utah and Wyoming, as well as in Vermont and Maine
where foreclosed property is now just coming out into the market.
REALTORS(c) Buyer Traffic Index
Based on July 2014-September 2014 RCI Surveys


4
The buyer and traffic index by state is based on data gathered from the last three surveys to accumulate
enough observations for each state.
44
39
20
30
40
50
60
70
80
2
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0
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REALTORS Indexes of Buyer and Seller Traffic--
as of Sep 2014 RCI Survey
(50="Moderate" Conditions)
Buyer Traffic Index Seller Traffic Index

Page | 7

REALTORS(c) Seller Traffic Index
Based on July 2014-September 2014 RCI Surveys


NAR also tracks data on the number of properties shown by REALTORS using
Sentrilock, LLC data. Lockboxes made by SentriLock, LLC are used in roughly a third of home
showings across the nation. For the third consecutive month this index rose to 65.7 in September
August (57 in August), which indicates that more than half of the roughly 200 markets tracked in
this panel reported an increase in the number of properties shown ( See Section IV
Commentaries for a discussion of this index). Showings need not necessarily translate to sales,
but foot traffic has a strong correlation with future contracts and home sales, so it can be viewed
as a peek ahead at sales trends two to three months into the future.

Home Price Growth Continued to Moderate in September 2014

Approximately 54 percent of REALTOR respondents reported that the price of their
average home transaction is higher today compared to a year ago (66 percent in August).
Home prices are rising at a slower pace now that home prices have almost recovered to their
peak levels. As of August 2014, the median home price of an exisiting home was $219,800 , just
about 5 percent shy of the peak price of $230,400 in July 2006 prior to the housing downturn.
Stronger price growth amid modest income and employment gains has eroded home
affordability, so a moderation in price growth is a boon for home buyers.


Page | 8



Based on the REALTORS most recent sales for September, the share of homes sold at a
net premium compared to the original listing price also declined to 11 percent compared to about
20 percent last year. About 70 percent of properties sold at a dicount compared to the listing
price, and about half reported selling at a discount of less than 10 percent.




54%
14%
32%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2
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9
Percentage of REALTOR Respondents Reporting Price
Change from a Year Ago--as of Sep 2014 RCI Survey
Higher Lower Unchanged
70%
19%
11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2
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1
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6
2
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1
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7
2
0
1
4
0
8
2
0
1
4
0
9
Percentage Distribution of the Price Discount /Premium On the
Original Listing Price of Properties Sold by REALTORS --as of
Sep 2014 RCI Survey
Sold at Net discount Sold at Original Listing Price Sold at a Net premium

Page | 9

REALTORS Expect Prices to Increase Modestly in the Next 12 Months
With rising inventory and modest expectation of demand growth, REALTORS
responding to the September 2014 survey expected home prices to increase in the next 12
months, with the median expected price increase at about 3 percent. The map shows the median
expected price change in the next 12 months by the state of REALTOR respondents in the
July September 2014 surveys
5
. Texas, Florida, Hawaii, and D.C. are areas where prices are
expected to still grow at above 5 percent. The real estate market in Texas is driven by strong
economic growth from a booming oil industry. In Florida, investors , including international
buyers, continued to prop up market demand.

Median Expected Price Change of REALTORS in Next 12 Months, By State
Based on July 2014-September 2014 RCI Surveys


Properties Stayed Longer on the Market at 56 Days in September 2014

Properties typically sold within 56 days in September (53 days in August)
6
. Short sales
were on the market for the longest at 116 days (135 days in August), and foreclosed properties
were on market at 59 days (53 days in August). Non-distressed properties were on the market
at 55 days (52 days in August). Conditions varied across areas. Approximately 35 percent of

5
In generating the median price expectatation at the state level, we use data for the last three surveys to have
close to 30 observations.
6
This is the median days on the market. A median of say 30 days means that half of the properties were on
the market for less than 30 days and another half of properties were on the market for more than 30 days.

Page | 10

respondents reported that properties were on the market for less than a month when sold (40
percent in August).








0
50
100
150
200
2
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1
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9
Median Days on Market of Sales Reported By
REALTORS--as of Sep 2014 RCI Survey

All Foreclosed Short Sales Not distressed
Source: NAR, RCI Survey
All: 56 Foreclosed: 59 Shortsale: 116 Not distressed: 55
35%
18%
14%
11%
5%
4%
5%
4%
5%
0%
10%
20%
30%
40%
50%
<1 mo 1-2 mo 2-3 mo 3-4 mo 4-5 mo 5-6 mo 6-9 mo 9-12 mo >=12
mo
Distribution of Sales Reported by REALTORS by Time On
Market--Sep 2014 RCI Survey
201309 201408 201409

Page | 11

II. Buyer and Seller Characteristics

Sales to First Time Buyers: 29 Percent of Sales
Approximately 29 percent of REALTORS reported that their last transaction in
August was by a first time home buyer (29 percent in August )
7
. Access to financing remains a
major issue for most buyers, specifically in relation to meeting the credit score and
downpayment requirements to be granted a mortgage (many REALTORS cited the
requirements as 740+ and 20 percent down). REALTORS also reported that the FHA upfront
mortgage insurance payments are making it more burdensome for homebueyrs to meet the
closing payment. Another major issue for most buyers is that home price appreciation has
outpaced wage growth, making homes less affordable. REALTORS commented on the
difficulty of obtaining FHA financing for condominiums, which are typically the starter homes
for first-time buyers.


About 29 percent of buyers were 34 years old and under, typically the age-group of first-
time home buyers.


7
First time buyers accounted for about 38 percent of all homebuyers based on data from NARs 2013 Profile
of Home Buyers and Sellers. NARs survey of buyers and sellers in general does not capture investor purchases but
does cover both existing and new home sales.
29%
0%
10%
20%
30%
40%
50%
60%
2
0
0
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1
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1
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0
7
First Time Buyers as Percent of Market*--
as of Sep 2014 RCI Survey
*Based on most recent sale of the month of REALTOR respondents.

Page | 12



Sales for Investment Purposes: 14 Percent of Sales
Approximately 14 percent of REALTORS reported that their last sale was for
investment purposes (12 percent in August). Since January of this year , the share of sales for
investment purposes has declined from the historical average of about 20 percent in recent years.
One reason is that there are fewer distressed properties, typically of interest to investors. Also,
home prices have increased at a faster pace than rents and have whittled down profits.




Age 34 and
under
29%
Age 35-55
48%
56+
23%
Age Distribution of Buyers
Based on Sep 2014 RCI Survey*

* RCI Survey asks about the characteristics of the most recent sale of the
respondent which altogether are viewed as representative of the sales for the
month.
14%
0%
5%
10%
15%
20%
25%
30%
2
0
0
8
1
0
2
0
0
9
0
1
2
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9
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4
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1
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1
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4
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1
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1
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0
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1
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1
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1
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1
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1
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0
2
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1
4
0
1
2
0
1
4
0
4
2
0
1
4
0
7
Sales to Investors as Percent of Market*--
as of Sep 2014 RCI Survey
*Purchase of property for investment purposes.* Based on most recent sale of the month
of REALTOR respondents.

Page | 13

Second-home Buyers and Relocation Sales

Purchases for vacation/second home purposes and for job/business relocation purposes
have been reported as relatively constant since 2010. About 10 percent reported a sale to a buyer
of a second home , and 13 percent reported a sale to a relocation buyer who moved due to a job-
related change.










10%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2
0
1
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1
4
0
5
2
0
1
4
0
7
2
0
1
4
0
9
Second-Home Buyers as Percent of Market*--
as of Sep 2014 RCI Survey
*Based on most recent sale of the month of REALTOR respondents.
13%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2
0
1
1
0
4
2
0
1
1
0
6
2
0
1
1
0
8
2
0
1
1
1
0
2
0
1
1
1
2
2
0
1
2
0
2
2
0
1
2
0
4
2
0
1
2
0
6
2
0
1
2
0
8
2
0
1
2
1
0
2
0
1
2
1
2
2
0
1
3
0
2
2
0
1
3
0
4
2
0
1
3
0
6
2
0
1
3
0
8
2
0
1
3
1
0
2
0
1
3
1
2
2
0
1
4
0
2
2
0
1
4
0
4
2
0
1
4
0
6
2
0
1
4
0
8
Relocation Buyers as Percent of Market*--
as of Sep 2014 RCI Survey
*Based on most recent sale of the month of REALTOR respondents.

Page | 14

Distressed Sales: 10 Percent of Sales

With rising home values and fewer foreclosures, sales of distressed sales have fallen
sharply compared to the magnitude in the wake of the Great Recession. In September 2014,
distressed sales accounted for 10 percent of sales: 7 percent of reported sales were foreclosed
properties, and about 3 percent were short sales
8
. Fewer distressed properties listed on the market
explain to some degree why investment sales have been on the decline.


Distressed property sold at a 14 percent average discount . For the past 12 months,
properties in above average condition were discounted by an average of 10-12 percent, while
properties in below average condition were discounted at an average of 14-20 percent.

8
The survey asks respondents to report on the characteristics of the most recent sale for the month.
0%
10%
20%
30%
40%
50%
60%
2
0
0
8
1
0
2
0
0
9
0
1
2
0
0
9
0
4
2
0
0
9
0
7
2
0
0
9
1
0
2
0
1
0
0
1
2
0
1
0
0
4
2
0
1
0
0
7
2
0
1
0
1
0
2
0
1
1
0
1
2
0
1
1
0
4
2
0
1
1
0
7
2
0
1
1
1
0
2
0
1
2
0
1
2
0
1
2
0
4
2
0
1
2
0
7
2
0
1
2
1
0
2
0
1
3
0
1
2
0
1
3
0
4
2
0
1
3
0
7
2
0
1
3
1
0
2
0
1
4
0
1
2
0
1
4
0
4
2
0
1
4
0
7
Distressed Sales, As Percent of Sales Reported by
REALTORS*-- as of Sep 2014 RCI Survey

Foreclosed Short Sale
Foreclosed: 7% Shortsale: 3%
* Based on most recent sale of the month of REALTOR respondents.

Page | 15




Cash Sales: 24 Percent of Sales

Approximately 24 percent of REALTOR respondents reported that their last
transaction was a cash sale (23 percent in August). The share of cash sales has declined from an
average of about 30 percent. This appears to be tied to the decline in the share of purchases for
investment purposes as well as the decline in share of sales of distressed properties. Foreign
clients, and buyers of second homes and distressed properties are more likely to pay cash than
first time home buyers. Close to a third of sales to investors and international clients are cash
sales. Less than 10 percent of first-time homebuyers make an all cash purchase.

14
14
5
10
15
20
25
30
2
0
0
9
0
2
2
0
0
9
0
5
2
0
0
9
0
8
2
0
0
9
1
1
2
0
1
0
0
2
2
0
1
0
0
5
2
0
1
0
0
8
2
0
1
0
1
1
2
0
1
1
0
2
2
0
1
1
0
5
2
0
1
1
0
8
2
0
1
1
1
1
2
0
1
2
0
2
2
0
1
2
0
5
2
0
1
2
0
8
2
0
1
2
1
1
2
0
1
3
0
2
2
0
1
3
0
5
2
0
1
3
0
8
2
0
1
3
1
1
2
0
1
4
0
2
2
0
1
4
0
5
2
0
1
4
0
8
Mean Percentage Price Discount of
Distressed Sales Reported by REALTORS* (in %)--
as of Sep 2014 RCI Survey

Foreclosed Shortsale
%
* Based on most recent sale of the month of REALTOR respondents.
12
14
20
10 10
14
0
5
10
15
20
25
Above average Average Below average
Mean Percent Price Discount by Property Condition
of Distressed Sales Reported by REALTORS --
Unweighted Average for Oct 2013 - Sep 2014
Foreclosed Short sale

Page | 16





First time Home Buyers Who Put Down Low DownPayment: 64 Percent

The majority of first-time home buyers who are able to obtain mortgage financing still
make a low downpayment. Among first-time buyers reported to be obtaining a mortgage in the
months of July-September 2014, about 64 percent made a downpayment under 6 percent
9
. This
was a decline from the 74 percent figure in 2009. Higher down payments , typically at 20
percent, may be required to compensate for the weak aspects of a borrowers credit profile. This
presents a barrier to the purchase of a home since the typical renters savings may be
substantially less than the downpayment and closing costs. On the other hand, with a

9
Based on the REALTOR respondents most recent sales for the survey months, which altogether are
viewed to be a representative sample of all sales for these months.
24%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2
0
0
8
1
0
2
0
0
9
0
1
2
0
0
9
0
4
2
0
0
9
0
7
2
0
0
9
1
0
2
0
1
0
0
1
2
0
1
0
0
4
2
0
1
0
0
7
2
0
1
0
1
0
2
0
1
1
0
1
2
0
1
1
0
4
2
0
1
1
0
7
2
0
1
1
1
0
2
0
1
2
0
1
2
0
1
2
0
4
2
0
1
2
0
7
2
0
1
2
1
0
2
0
1
3
0
1
2
0
1
3
0
4
2
0
1
3
0
7
2
0
1
3
1
0
2
0
1
4
0
1
2
0
1
4
0
4
2
0
1
4
0
7
Cash Sales as Percent of Market*--
as of Sep 2014 RCI Survey
* Based on most recent sale of the month of REALTOR respondents.
7%
63%
50%
16%
68%
42%
0%
10%
20%
30%
40%
50%
60%
70%
80%
FTHBuyer Investor Second home Relocation International Distressed Sale
Percent of Sales Reported by REALTORS That are All-Cash,
by Type of Buyer-- Sep 2014 RCI Survey

Page | 17

downpayment of 20 percent or more, borrowers do not have to pay the mortgage insurance
premium.



International Transactions: About 2 Percent of Residential Market

Approximately 2 percent of REALTOR respondents reported their last sale was a
purchase by a foreigner not residing in the U.S. International buyers frequently pay cash as well
as purchase properties above the median price of the domestic buyer. For the 12 months ending
March 2014, NAR estimated that sales to non-resident international clients and foreigners who
are temporarily residing in the U.S. amounted to $ 92.2 billion, as reported in the 2014 Profile of
International Homebuying Activity.
10



10
http://www.realtor.org/topics/profile-of-international-home-buying-activity
74% 64%
50%
55%
60%
65%
70%
75%
80%
85%
90%
2
0
0
9
0
6
2
0
0
9
0
9
2
0
1
0
0
2
2
0
1
0
0
5
2
0
1
0
0
8
2
0
1
0
1
1
2
0
1
1
0
2
2
0
1
1
0
5
2
0
1
1
0
8
2
0
1
1
1
1
2
0
1
2
0
2
2
0
1
2
0
5
2
0
1
2
0
8
2
0
1
2
1
1
2
0
1
3
0
2
2
0
1
3
0
5
2
0
1
3
0
8
2
0
1
3
1
1
2
0
1
4
0
2
2
0
1
4
0
5
2
0
1
4
0
8
Percent of First-time Buyers Obtaining a Mortgage Who
Paid Downpayment of 6% or Less*--as of Sep 2014
Source: NAR RCI Surveys. Computations are based on the most recent sale for
the month reported by REALTOR respondents in the last three surveys.

Page | 18




Rentals

Rent increases appeared to have moderated in September. Among REALTOR
respondents involved in a rental, 46 percent reported higher residential rents compared to rent
levels 12 months ago (54 percent in August). About 22 percent of REALTORS reported
conducting an apartment rental, and about 3 percent reported a commercial rental transaction.


1.8%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2
0
1
0
0
3
2
0
1
0
0
5
2
0
1
0
0
7
2
0
1
0
0
9
2
0
1
0
1
1
2
0
1
1
0
1
2
0
1
1
0
3
2
0
1
1
0
5
2
0
1
1
0
7
2
0
1
1
0
9
2
0
1
1
1
1
2
0
1
2
0
1
2
0
1
2
0
3
2
0
1
2
0
5
2
0
1
2
0
7
2
0
1
2
0
9
2
0
1
2
1
1
2
0
1
3
0
1
2
0
1
3
0
3
2
0
1
3
0
5
2
0
1
3
0
7
2
0
1
3
0
9
2
0
1
3
1
1
2
0
1
4
0
1
2
0
1
4
0
3
2
0
1
4
0
5
2
0
1
4
0
7
2
0
1
4
0
9
Sales to International Clients as Percent of Market*--
as of Sep 2014 RCI Survey
*Based on most recent sale of the month of REALTOR respondents.
46%
-5%
5%
15%
25%
35%
45%
55%
65%
2
0
1
0
1
2
2
0
1
1
0
2
2
0
1
1
0
4
2
0
1
1
0
6
2
0
1
1
0
8
2
0
1
1
1
0
2
0
1
1
1
2
2
0
1
2
0
2
2
0
1
2
0
4
2
0
1
2
0
6
2
0
1
2
0
8
2
0
1
2
1
0
2
0
1
2
1
2
2
0
1
3
0
2
2
0
1
3
0
4
2
0
1
3
0
6
2
0
1
3
0
8
2
0
1
3
1
0
2
0
1
3
1
2
2
0
1
4
0
2
2
0
1
4
0
4
2
0
1
4
0
6
2
0
1
4
0
8
Percent of REALTOR Respondents Reporting Rising Rent
Levels Compared to 12 Months Ago--
as of Sep 2014 RCI Survey

Page | 19

III. Current Issues
Credit Conditions Remain Tight
Credit continued to flow to those with high credit scores. About 51 percent of survey
respondents who provided credit score information reported FICO credit scores of 740 and
above. About 3 percent of REALTORS reported a purchase by a buyer with credit score of less
than 620. In 1999-2004, about 37 percent of Fannie Maes acquisition and 35 percent of Freddie
Macs acquisitions had credit score of 700 or less
11
.
Recently, Fair Isaac Corporation introduced a new scoring model (FICO 9) that gives
less weight to unpaid medical bills and missed payments that have been paid off. FICO
estimates that the new scoring model can boost credit scores of first-time homebuyers by about
25 points and minorities by about 100 points. It has been reported that Fannie Mae and Freddie
Mac still use the old credit score model. A NAR survey showed that small banks who put the
loans on their own portfolio instead of selling the loans to the GSEs are more amenable to using
the new credit score model
12
. Credit limitations could loosen to the extent that home buyers
make greater use of mortgage origination by community banks and credit unions.




11
http://www.urban.org/UploadedPDF/413206-Housing-Finance-At-A-Glance-A-Monthly-Chartbook-
August2014.pdf
12
Ken Fears, New Credit Models Could Help, Someday.
http://economistsoutlook.blogs.realtor.org/2014/10/09/new-credit-models-could-help-someday/

11%
13%
23%
51%
0%
20%
40%
60%
80%
100%
2
0
1
2
0
2
2
0
1
2
0
4
2
0
1
2
0
6
2
0
1
2
0
8
2
0
1
2
1
0
2
0
1
2
1
2
2
0
1
3
0
2
2
0
1
3
0
4
2
0
1
3
0
6
2
0
1
3
0
8
2
0
1
3
1
0
2
0
1
3
1
2
2
0
1
4
0
2
2
0
1
4
0
4
2
0
1
4
0
6
2
0
1
4
0
8
Distribution of FICO Scores Reported by REALTORS--
as of Sep 2014 RCI Survey
lt 620 620 - 659 660-699 700-739 740+
Source: NAR RCI Surveys

Page | 20

Reasons For Not Closing A Sale in September 2014

The difficulty of obtaining credit and the lack of affordable homes were frequently
cited as deterrents to home buying by REALTORS responding to the September 2014 survey.
About 15 percent reported having clients who could not obtain financing. Meanwhile, about 11
percent of REALTORS who did not close a sale reported that the buyer and seller could not
agree on the price, and 8 percent reported the buyer lost the bidding competition. Other
reasons include responses that the buyer is still searching or that the transaction is in the escrow
period or a closing is underway. REALTORS have reported that under tighter underwriting
guidelines, the documentation requirements for obtaining a mortgage have become very stringent
and the procedure more protracted
13
. Appraisal issues were reported as accounting for 3 percent
of failures to close a sale.






13
Originators have become very stringent at verifying documentation requirements because of the risk that
the GSEs will require them to repurchase the loan if the representation and warranties in the loan documents are
found to have been violated. The period within which the originator may be asked to repurchase the loan if the reps
and warrants are not met is three years.

Page | 21

IV. Commentaries by NAR Research
Affordability in Monthly Mortgage Payments
Lawrence Yun, Chief Economist
o Home prices have rebounded nicely with the latest median home price on a single-family
home at $220,600 in the U.S., up from around $160,000 just few years ago.
o Such a robust price gain from the trough would imply less affordable conditions. But data is
says home buying is still attractive because price gains have been partly neutered by lower
mortgage rates. Moreover, income has grown a bit from job creation and falling
unemployment rate.
o A typical monthly mortgage payment for recent homebuyers was $867 if purchasing a
middle-priced home at the prevailing mortgage rate and having put 20 percent down
payment. That translates into 15.9 percent of monthly gross family income now, compared
to the average of 21.3 percent over the past three decades.
o The overall debt servicing costs, including mortgage and everything else, have also been
trending down and reached a historic lows. Low interest rates are also holding down
payments on credit cards, auto loans, and other consumer borrowing costs. Moreover, a very
high percentage of cash-sales of homes in recent years have held down the overall mortgage
debt for the country.
o Are you happy today? Incredibly, research shows one variable that has very high correlation
to todays happiness. Its about how well one slept the night before. Along with this, be
mindful of the common saying: One who is careful when borrowing has but few cares and
fewer sorrows.


Page | 22









Page | 23

Foot Traffic Diffusion Index Continues to Increase in September
Ken Fears, Director, Regional Economics and Housing Finance Policy
Foot traffic jumped 8.7 points to 65.7 in September, the third successive increase. A clear
majority of markets in the panel experienced stronger foot traffic in September of this year than
the same time last year. Low mortgage rates and an improved labor market breathed life in
consumer confidence and boosted interest in housing. This improvement is in contrast to last
year when traffic eased in the wake of the sharp increase in mortgage rates.

Every month SentriLock, LLC. provides NAR Research with data on the number of properties
shown by a REALTOR. Lockboxes made by SentriLock, LLC. are used in roughly a third of
home showings across the nation. Foot traffic has a strong correlation with future contracts and
home sales, so it can be viewed as a peek ahead at sales trends two to three months into the
future. For the month of September, the diffusion index for foot traffic rose 8.7 points to 65.7,
the highest level since June of last year when it reached 70.4.
The index is above the 50 mark which indicates that more than half of the roughly 200 markets
in this panel had stronger foot traffic in September of 2014 than the same month a year earlier.
This reading does not suggest how much of a change in traffic there was, just that more than half
of the markets tracked experienced more foot traffic in September of 2014 than 12 months
earlier.
Despite tight credit and inventories, consumers are interested in housing. As these factors abate,
home sales will benefit. This trend suggests underling stability to home price growth. However,
sustained credit tightness could damage consumer confidence and hamper a resilient recovery.

Page | 24

Median Age of Home Buyers: 2003-2013
Nadia Evangelou, Research Economist
The median age of First-Time Home Buyers was 31 years old in 2013, but it differs
slightly each year. The maps below show the median age of home buyers at the state-level for
2013. Interactive maps from 2003-2013 can be found at
http://economistsoutlook.blogs.realtor.org/2014/09/23/interactive-median-age-of-home-buyers-
2003-2013/

There is an obvious increase in the median age since 2003, specifically for 2006 and
beyond. In 2011, the median age of home buyers reached its highest value. In addition, First-
Time Home Buyers exhibit greater stability in median age than Repeat Home Buyers.At the
state-level, here are some highlights for the median age of each type of home buyer:

All Home Buyers:
- Pennsylvania (2003) and Michigan (2008) had the lowest median age, 29 years old. On the
contrary, Oklahoma (2008), Arizona (2013) and Florida (2013) had the highest median age,
which was 55 years and over.
- Maine, Illinois, Minnesota and Virginia show stability in the median age of all home buyers
across the years. Idaho, Arizona, Indiana and New Mexico experienced the greatest variations in
the median age. For instance, Arizonas median age for all home buyers in 2005 was 34 years
old while last year it increased to 56 years old.

First-Time Home Buyers:
- Oklahoma and North Dakota had the lowest median age for First-Time Home Buyers, 25 years
old in 2007 and 2010, respectively. In contrast, Mississippis median age was 46 years old in
2012.
- Indiana, Illinois and Wisconsin exhibit stability in median age over the years while Nevada
and Texas have a fluctuating trend in the median age for First-Time Home Buyers.

Repeat Home Buyers:
- Arkansas and Utah had the lowest median age, 30 years old in 2004. Conversely, Nevadas
median age reached the highest value in 2013 and 2011 (62 and 63 years old, respectively).
-Hawaii shows stability in the median age of repeat home buyers while Idaho, Utah and Nevada
exhibited the greatest variations. For instance, Idahos median age was 31 years old in 2004
while last year it was 59 years old.

Next Release:
The 2014 NAR Profile of Home Buyers and Sellers will be released in early November, at which
time we will look for any fresh trends in the data.

Methodology:
Data used was from the Profile of Home Buyers and Sellers (for the period 2003-2013). The
sample includes home purchases for primary residence use only. In order to be considered, a
state needed to have sufficient response data for each one of the types of home purchase (first-
time and repeat). The states with no available data are colored in gray.

Page | 25




Page | 26