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REALTORS CONFIDENCE INDEX SURVEY

Report on the December 2016 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 December 2016 report is based on the responses of 3,625 REALTORS, 2,025 of which closed a
sale. 1 Respondents reported on local market conditions experienced in December 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 January 310, 2017. 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

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.

Table of Contents
Summary ................................................................................................................................................... 3
I.

Market Conditions .............................................................................................................................. 4

REALTORS Reported Strong Buyer Traffic Amid 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........................... 10
REALTORS Expect Modest Price Change in Next 12 Months .......................................................... 11
Properties Typically on the Market for 52 Days .................................................................................... 14
II. Buyer and Seller Characteristics......................................................................................................... 18
Sales to First-Time Buyers: 32 Percent of Sales .................................................................................... 18
Distressed Sales: Seven Percent of Sales ............................................................................................... 21
Sales for Investment Purposes: 15 Percent of Sales ............................................................................... 22
Cash Sales: 21 Percent of Sales .............................................................................................................. 23
Buyer Downpayments ............................................................................................................................ 25
III. Issues Affecting Transactions ........................................................................................................... 26
Contract Settlement: Financing, Home Inspection, and Appraisals Are Major Issues........................... 26

Summary
While local conditions vary, the REALTORS Buyer Traffic Index and the REALTORS Confidence
IndexCurrent Conditions for single-family homes remained above 50 in December 2016, indicating
that more respondents reported strong than weak conditions. Both indices were higher than their
levels in December 2015 and were essentially unchanged from November 2016 levels. 3 The
REALTORS Seller Traffic Index slightly increased from one year ago, but it has remained below 50
since November 2008, indicating that seller activity is still weak.
In December 2016, first-time homebuyers accounted for 32 percent of sales (32 percent in 2016; 30
percent in 2015). 4 With fewer new foreclosures, distressed properties accounted for seven percent of
sales (seven percent in 2016; nine percent in 2015), purchases for investment purposes made up 15
percent of sales (14 percent in 2016; 14 percent in 2015), and cash sales accounted for 21 percent of
sales (23 percent in 2016; 24 percent in 2015). Amid tight supply, half of properties that sold in
December 2016 were on the market for 52 days or less compared to 58 days in December 2015 (43 in
2016; 50 in 2015).
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. Overall, respondents
were 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 these markets registering at
50 and above.
December 2016 REALTORS Confidence Index Survey Highlights
Dec-16

Nov-16

Dec-15

REALTORS Buyer Traffic Index

57

57

51

REALTORS Seller Traffic Index

39

42

38

RCICurrent Conditions: Single-Family Sales

62

63

57

RCISix-Month Outlook: Single-Family Sales

76

74

72

First-Time Home Buyers, as Percent of Sales

32

32

32

Sales to Investors, as Percent of Sales

15

12

15

Cash Sales, as Percent of Sales

21

21

24

Distressed Sales, as Percent of Sales

Median Days on Market

52

43

58

Sold at Original List Price or Premium, as Percent of Sales

34

37

32

Median Expected Price Change in Next 12 Months (%)

3.2

3.2

3.3

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.

I.

Market Conditions

REALTORS Reported Strong Buyer Traffic Amid Tight Supply


The REALTORS Buyer Traffic Index registered at 57 in December 2016 (57 in November 2016; 51 in
December 2015), indicating that more respondents viewed buyer traffic conditions as strong rather
than weak. 5 For the year 2016, the index registered at 63 (60 in 2015). 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.
The REALTORS Seller Traffic Index registered at 39 in December 2016 (42 in November 2016; 38 in
December 2015), indicating that more respondents viewed seller traffic conditions as weak rather than
strong. For the year 2016, the index registered at 43 (40 in 2015). 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.
REALTORS Buyer and Seller Traffic Indices
as of December 2016
80
70
60
50
40
30
20

57

200801
200806
200811
200904
200909
201002
201007
201012
201105
201110
201203
201208
201301
201306
201311
201404
201409
201502
201507
201512
201605
201610

39

Buyer Traffic Index

Seller Traffic Index

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.

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.

Buyer and Seller Traffic Indices


70

63

60
50
40

46
40

30

53
41
31

39

39

34

60

54
42

43

41

63
44

20
10
0

2009

2010

2011

2012

Buyer Traffic Index

2013

2014

2015

2016

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 the few states
where buyer traffic was weak. 6 Buyer traffic conditions were very strong only in the state of
Washington and the District of Columbia.

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.
6

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.

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. 7 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. 8

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/

REALTORS Are Generally Optimistic Over the Next Six Months


The REALTORS Confidence IndexSix-Month Outlook for single-family homes, townhomes, and
condominiums registered above 50, indicating that more REALTOR respondents expected market
conditions to be strong than weak over the next six months. 9
The index for condominiums was at 56 in December 2016 (54 in November 2016; 51 in December
2015), 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. 10 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 December 2016
100
80

76

60

61

40

56

20
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

Single-family

Townhome

Condominium

The REALTORS Confidence IndexSix-Month Outlook indices for all properties have been trending
upward since 2012, and on an annual basis, 2016 was a record year for the indices for each property
type.

9 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.
10The 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

REALTORS Confidence IndexSix-Month Outlook


80
70
50
30
20
10
0

63

49

46

44

42

57

60
40

68

40
23
19

2009

33

35
20

18
15
2010

38

70

73

52

56
52

48

32

17
2011

Single-family

2012

2013

Townhome

2014

2015

2016

Condominium

In the single-family homes market, the outlook in the next six months is strong in many states to very
strong in the District of Columbia and in 14 states. 11 Only North Dakota registered with a moderate
outlook in the most recent period. In the townhomes and condominiums markets, the outlook is more
evenly mixed, from weak to strong in most states, with only the District of Columbia registering a
very strong outlook for both townhomes and condominiums. Post-election factors may boost the
outlook in the District of Columbia. 12

11 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.
12
See for example this review: http://economistsoutlook.blogs.realtor.org/2016/10/05/do-elections-affect-the-housing-market-inwashington-dc/

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, 87 percent of respondents reported that home prices either remained constant or rose in
December 2016 compared to one year ago (84 percent in November 2016; 87 percent in December
2015). 13
Percent of Respondents Who Reported Constant or Higher
Price Change Compared to One Year Ago
100%
90%
80%
70%
60%
50%
40%

201612

201609

201606

201603

201512

201509

201506

201503

201412

201409

201406

201403

201312

201309

201306

201303

201212

201209

201206

201203

87%

13

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

10

Because conditions are competitive for buyers, offers continue to be high relative to asking price; 34
percent of properties sold at or above the original listing price (37 percent in November 2016; 32 percent
in December 2015). When this survey first gathered this information in December 2012, only 28 percent
of properties sold at or above the original list price.
Percent of Properties Sold at Original Price or at Net
Premium from the Listing Price as of December 2016
45%
40%
35%

34%

30%
25%
201612

201609

201606

201603

201512

201509

201506

201503

201412

201409

201406

201403

201312

201309

201306

201303

201212

20%

REALTORS Expect Modest Price Change in Next 12 Months


Among REALTORS who responded to the October, November, and December 2016 surveys, half of
the respondents expected home prices to increase by 3.2 percent or less over the next 12 months. The
map below shows the median expected price change of the respondents in the next 12 months at the state
level. 14 The state of Washington has the highest median expected price growth at five percent. The oilproducing states of North Dakota and Alaska 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 home prices in the next 12 months. Looking at the values over time in selected states, the median
expected price change has generally fallen from what was expected in the summer. In more than half of
states, expected price change exceeds the price growth compared to the end of 2015, even as home
prices continue to rise. 15

14

The median expected price change is a measure that represents the middle value of the distribution of responses.
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.
15

11

Oct2016-Dec2016

Jul2016-Sep2016

Apr2016-Jun2016

Jan2016-Mar2016

Oct2015-Dec2015

Jul2015-Sep2015

Apr2015-Jun2015

Jan2015-Mar2015

Oct2014-Dec2014

Jul2014-Sep2014

Apr2014-Jun2014

Jan2014-Mar2014

Oct2013-Dec2013

Jul2013-Sep2013

Apr2013-Jun2013

Jan2013-Mar2013

Oct2012-Dec2012

10.0
8.0
6.0
4.0
2.0
0.0

REALTORS Median Expected Price Change Over the


Next 12 Months in Some West States
CA

OR

WA

AZ

CO

12

Oct2016-Dec2016

Jul2016-Sep2016

Apr2016-Jun2016

Jan2016-Mar2016

Oct2015-Dec2015

Jul2015-Sep2015

Apr2015-Jun2015

Jan2015-Mar2015

Oct2014-Dec2014

Jul2014-Sep2014

Apr2014-Jun2014

Jan2014-Mar2014

Oct2013-Dec2013

Jul2013-Sep2013

Apr2013-Jun2013

Jan2013-Mar2013

Oct2012-Dec2012

Oct2016-Dec2016

Jul2016-Sep2016

Apr2016-Jun2016

Jan2016-Mar2016

Oct2015-Dec2015

Jul2015-Sep2015

Apr2015-Jun2015

Jan2015-Mar2015

Oct2014-Dec2014

Jul2014-Sep2014

Apr2014-Jun2014

Jan2014-Mar2014

Oct2013-Dec2013

Jul2013-Sep2013

Apr2013-Jun2013

Jan2013-Mar2013

Oct2012-Dec2012

REALTORS Median Expected Price Change Over the


Next 12 Months in Some Midwest States

7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
IL

MI

OH

WI

REALTORS Median Expected Price Change Over the


Next 12 Months in Some South States

8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
FL

GA

NC

SC

TN

VA

TX

13

REALTORS Median Expected Price Change Over the


Next 12 Months in Some Northeast States
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0

MA
NJ
NY

Oct2016-Dec2016

Jul2016-Sep2016

Apr2016-Jun2016

Jan2016-Mar2016

Oct2015-Dec2015

Jul2015-Sep2015

Apr2015-Jun2015

Jan2015-Mar2015

Oct2014-Dec2014

Jul2014-Sep2014

Apr2014-Jun2014

Jan2014-Mar2014

Oct2013-Dec2013

Jul2013-Sep2013

Apr2013-Jun2013

Jan2013-Mar2013

Oct2012-Dec2012

PA

Properties Typically on the Market for 52 Days


Properties stayed on the market for fewer days in December 2016 compared to one year ago, amid
strong demand and tight supply. Nationally, properties sold in December 2016 were typically on the
market for 52 days (43 days in November 2016; 58 days in December 2015). 16 In 2016, properties
stayed on the market for 43 days (50 days in 2015). 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.
Median Days on Market of Sales Reported by
REALTOR Respondents as of December 2016
200

All: 52 Foreclosed: 53 Short sale: 97 Non-distressed: 50

150
100
50
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

16

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.

14

Median Days on Market of Sales Reported by


REALTOR Respondents
97
78

2011

2012

53

56

50

2013

2014

2015

43

2016

Nationally, 37 percent of properties that sold in December 2016 were on the market for less than a
month. 17 Only 11 percent of properties were on the market for six months or longer.
Percentage Distribution of Time on Market of Sales Reported by
REALTOR Respondents as of December 2016 (In Months)
50%
40%

37%

30%
18%

20%

15%

11%

10%
0%

5%
<1

4%

5%

3%

1 to <2 2 to <3 3 to <4 4 to <5 5 to <6 6 to <9 9 to <12


201512

201611

3%
12

201612

During OctoberDecember 2016, properties were typically on the market for less than 31 days in
Washington, Oregon, California, Alaska, Utah, Nebraska, Massachusetts, 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 vary seasonally. 18 Local conditions vary, and the data is provided for REALTORS who want to
compare local markets against other states and the national summary.

17

Days on market usually refers to the time from listing date to contract date.
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.

18

15

201103-201105
201106-201108
201109-201111
201112-201202
201203-201205
201206-201208
201209-201211
201212-201302
201303-201305
201306-201308
201309-201311
201402-201404
201405-201407
201408-201410
201411-201501
201502-201504
201505-201507
201508-201510
201511-201601
201602-201604
201605-201607
201608-201610

Median Days on Market of Sales Reported by


REALTORS in Some West States

120

100

80
CA

60

40
WA

20
AZ

0
CO

16

180
160
140
120
100
80
60
40
20
0
201103-201105
201106-201108
201109-201111
201112-201202
201203-201205
201206-201208
201209-201211
201212-201302
201303-201305
201306-201308
201309-201311
201402-201404
201405-201407
201408-201410
201411-201501
201502-201504
201505-201507
201508-201510
201511-201601
201602-201604
201605-201607
201608-201610

201103-201105
201106-201108
201109-201111
201112-201202
201203-201205
201206-201208
201209-201211
201212-201302
201303-201305
201306-201308
201309-201311
201402-201404
201405-201407
201408-201410
201411-201501
201502-201504
201505-201507
201508-201510
201511-201601
201602-201604
201605-201607
201608-201610

180
160
140
120
100
80
60
40
20
0

Median Days on Market of Sales Reported by


REALTORS in Some Midwest States
IL

MI

OH

WI

Median Days on Market of Sales Reported by


REALTORS in Some South States
FL

GA

NC

VA

TX

17

MA
NJ

201103-201105
201106-201108
201109-201111
201112-201202
201203-201205
201206-201208
201209-201211
201212-201302
201303-201305
201306-201308
201309-201311
201402-201404
201405-201407
201408-201410
201411-201501
201502-201504
201505-201507
201508-201510
201511-201601
201602-201604
201605-201607
201608-201610

160
140
120
100
80
60
40
20
0

Median Days on Market of Sales Reported by


REALTORS in Some Northeast States

NY
PA

II. Buyer and Seller Characteristics


Sales to First-Time Buyers: 32 Percent of Sales
The share of first-time homebuyers accounted for 32 percent of residential sales in December 2016 (32
percent in November 2016; 32 percent in December 2015). 19 In 2016, first-time homebuyers accounted
for 32 percent of sales (30 percent in 2015). 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. Low mortgage rates have also bolstered homebuying, although the
increase in interest rates since November appears to have affected demand in some areas, according to
survey respondents. 20 Mortgage rates are likely to continue to rise modestly in 2017.

19

First-time buyers accounted for 35 percent of all home buyers based on data from NARs 2016 Profile of Home Buyers and Sellers
(HBS), up from 32 percent in 2016. The HBS is a survey of primary residence home buyers and does not capture investor purchases but
does cover both existing and new home sales from July 2015 to June 2016. The RCI Survey is a survey of REALTORS about their
transactions and captures purchases for investment purposes and second homes for existing homes.
20 Mortgage 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 23, and it climbed to 4.32 percent in the week of December 29. The average rate eased to 4.12 percent in the week of January
12, 2017, with rates likely to remain above four percent during 2017.

18

First-time Buyers as Percent of Residential Market


as of December 2016
60%
50%
40%

32%

30%
20%
10%

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

0%

First-time Homebuyers as Percent of Residential Market


45%
39%

2009

2010

33%

32%

2011

2012

29%

29%

30%

32%

2013

2014

2015

2016

The share of first-time homebuyers increased in states such as Arizona, California, Florida, and North
Carolina in 2016 compared to the rates in 2015. 21 The share of first-time homebuyers has also increased
in Arizona, Florida, and New York since 2012, the first year of solid growth since the recession of 20082009.

21The

analysis is among states that have at least 500 observations.

19

Buyers 34 years old and under, who are likely to be first-time buyers, accounted for 30 percent of
residential buyers in December 2016, (29 percent in November 2016; 27 percent in December 2015).
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. 22
Age Distribution of Buyers for Sales Reported by
REALTOR Respondents as of December 2016

60%
50%
40%
30%
20%
10%
0%

47%

Age 34 and under

Age 35 to 55

201611

201609

201607

201605

201603

201601

201511

201509

201507

201505

201503

201501

201411

201409

201407

201311

201307

30%
23%

Age 56 and over

22

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.

20

Homebuyers who were renting prior to their recent home purchase accounted for 39 percent of sales in
December 2016 (40 percent in November 2016; 38 percent in December 2015). The fraction of buyers
who were renting prior to their recent home purchase has increased from the 36 percent share in
November 2014 when this information was first collected. 23
Living Status of Homebuyers at Time of Home Purchase as of
December 2016

60% 55%

50%

40% 36%
20%

39%

9%

11%
201612

201610

201608

201606

201604

201602

201512

201510

201508

201506

201504

201502

201412

201410

201408

0%

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 December 2016 (six percent in November 2016;
eight percent in December 2015). Foreclosed properties were five percent of residential sales, while
short sales were only two percent of residential sales. 24 In 2016, distressed sales accounted for seven
percent of sales (eight percent in 2015). 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.

23

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.
24
The survey asks respondents who had a sale in the month to report on the characteristics of the most recent sale closed.

21

Distressed Sales as Percent of Residential Sales


as of December 2016

60%
50%

Foreclosed: 5% Short sale: 2%

40%
30%
20%
10%

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

0%

Foreclosed

Short sale

Distressed Sales as Percent of Residential Sales

13%

12%

12%
12%

23%

2009

22%

2010

21%

2011

6%
15%
2012
Foreclosed

3%

10%

8%

2%
6%

2%
5%

2013

2014

2015

2016

Short Sales

Sales for Investment Purposes: 15 Percent of Sales


Investment sales made up 15 percent of sales in December 2016 (12 percent in November 2016; 15
percent in December 2015). In 2016, investment sales accounted for 14 percent of sales (14 percent in
2015). Purchases for investment purposes have generally been on the decline since 20112012 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.

22

Sales for Investment Purpose as Percent of Residential


Sales as of December 2016
30%
25%
20%

15%

15%
10%
5%

200810
200903
200908
201001
201006
201011
201104
201109
201202
201207
201212
201305
201310
201403
201408
201501
201506
201511
201604
201609

0%

Sales for Investment Purpose as Percent of Residential


Sales

15%

2009

18%

2010

20%

2011

20%

2012

19%

2013

16%

2014

14%

14%

2015

2016

Cash Sales: 21 Percent of Sales


In December 2016, 21 percent of sales were cash sales (also 21 percent in November 2016; 24 percent in
December 2015). In 2016, cash sales accounted for 23 percent of sales (24 percent in 2015). 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.

23

Cash Sales as Percent of Residential Sales


as of December 2016
40%
35%
30%
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

21%

All-Cash Sales as Percent of Residential Sales


31%

28%

29%

31%

29%

20%

2009

2010

2011

2012

2013

2014

24%

23%

2015

2016

Percent of All-Cash Sales By Type of Buyer


in December 2016
70%
60%
50%
40%
30%
20%
10%
0%

59%

57%
47%

45%

13%

Investor

International

Distressed Second Home Relocation


Sale

6%
First-time
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 nonU.S. citizens who reside in the United States on work, student, or other types of visas (Type B).

24

Buyer Downpayments
Among all buyers who are financing a home purchase, 38 percent made a downpayment of at least 20
percent, a share that has remained about the same since NAR began collecting this information in 2011.
Percent of Mortgage Sales With Downpayment of
At Least 20 Percent as of December 2016

50%

38%

40%
30%
20%
10%

201104
201107
201110
201201
201204
201207
201210
201301
201304
201307
201310
201401
201404
201407
201410
201501
201504
201507
201510
201601
201604
201607
201610

0%

Share of First-time Buyers Obtaining a Mortgage Who Put in


a Zero to Six Percent Downpayment as of December 2016*
80%
75%
70%
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

66%

*The data reported for the month is a rolling three-month figure.

Among sales to first-time buyers who purchased a property in OctoberDecember 2016 and who
obtained a mortgage, 66 percent made a downpayment of zero to six percent (65 percent in November
2016; 65 percent in December 2015). In June 2009 when NAR first collected this information, 74
percent of first-time homebuyers obtained loans with a zero to six percent downpayment. Homebuyers
who put down low downpayments are likely to be first-time homebuyers. 25 The Federal Housing
Authority (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
25

According to NARs 2016 Profile of Home Buyer and Sellers (HBS), first-time buyers typically made a downpayment of six percent,
while repeat buyers typically made a downpayment of 14 percent.

25

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. 26
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.

III. Issues Affecting Transactions


Contract Settlement: Financing, Home Inspection, and Appraisals Are Major Issues
Among respondents who reported they had a contract that went into settlement or was terminated over
the period OctoberDecember 2016, 61 percent reported the contracts were settled on time, 33 percent
had delayed settlement, and six percent were terminated.
How Sales Contracts Were Settled
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

6%
33%

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

61%

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 (33 percent), issues related to obtaining financing and
appraisal issues were the primary causes of the delay. Regarding appraisal issues, respondents reported
facing appraisal delays due to a shortage of appraisers, valuations that are not in line with market
conditions, and out-of-town appraisers who are not familiar with local conditions.

26

See: http://www.realtor.org/reports/2016-q3-homeownership-opportunities-and-market-experience-home-survey.

26

Problems Encountered for Contracts That Were Delayed But Eventually


Went Into Settlement in OctoberDecember 2016*
(Delayed Contracts Represent 33 Percent of Closed or Terminated
Contracts)
Issues related to obtaining financing
37%
Appraisal issues
19%
Home inspection/environmental issues
13%
Titling/deed issues
12%
Contingencies stated in the contract
9%
No problems encountered
6%
Issues in buy/sell distressed property
6%
Home/hazard/flood insurance issues
1%
Buyer lost job
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,
delays related to complying with regulation, etc.

Based on information collected from the most recent sale of REALTOR respondents ,the median days
to close a contract was 40 days in December 2016 (37 days in November 2016; 40 days in December
2015). 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.

Median and Average Days to Close a Contract

50
45

46
41

40
35
30

43
40

42
36

201507
201508
201509
201510
201511
201512
201601
201602
201603
201604
201605
201606
201607
201608
201609
201610
201611
201612

25

Average

Median

27

Among contracts that were terminated (six percent), issues related to home inspections, appraisal, and
obtaining financing were the major causes of termination.
Problems Encountered for Contracts That Were Terminated
in OctoberDecember 2016*
(Terminated Contracts Represent Six Percent of
Closed or Terminated Contracts)
Home inspection/environmental issues
23%
Appraisal issues
14%
Issues related to obtaining financing
14%
Contingencies stated in the contract
13%
No problems encountered
8%
Issues in buy/sell distressed property
5%
Buyer lost job
5%
Titling/deed issues
5%
Home/hazard/flood insurance issues 0%
Other

30%

*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.

28

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

29