REALTORS CONFIDENCE INDEX SURVEY

Report on the June 2015 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 based on a monthly survey of REALTORS.
The June 2015 report is based on the responses of 2,901 REALTORS about local market
conditions in June. Of those who responded, 1,835 respondents closed a sale and were asked
information about the characteristics of their last closed transaction in June. The data collected
from a random sample of REALTORS is viewed to be representative of the sales for the
month.1 The online survey was conducted from July 1-8, 2015. All real estate is local: conditions
in specific markets may 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. For questions or information about this Report, please email jsmith@realtors.org.

Lawrence Yun, Senior Vice President and Chief Economist

Jed Smith, Managing Director, Quantitative 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 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 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 randomly selected to receive a gift card.

Table of Contents
Summary .................................................................................................................................................... 3
I. Market Conditions ................................................................................................................................. 4
REALTORS Broadly Reported Strong Markets .................................................................................... 4
REALTORS Remain Generally Confident About the Outlook in the Next Six Months ....................... 4
REALTORS Generally Reported Improving Buyer and Seller Traffic ................................................. 8
61 Percent of REALTORS Reported Higher Prices from a Year Ago ................................................ 10
REALTORS Expect Prices to Increase Modestly in Next 12 Months................................................. 11
Properties Stayed on the Market for Less Time at 34 Days .................................................................... 12
II. Buyer and Seller Characteristics ......................................................................................................... 14
Sales to First Time Buyers: 30 Percent of Sales ..................................................................................... 14
Sales for Investment Purposes: 12 Percent of Sales ............................................................................... 17
Distressed Sales: 8 Percent of Sales ........................................................................................................ 18
Cash Sales: 22 Percent of Sales .............................................................................................................. 20
International Transactions: Less than Two Percent of Residential Market ............................................ 22
Rents Continue to Increase ..................................................................................................................... 23
III. Current Issues .................................................................................................................................... 24
Credit Conditions .................................................................................................................................... 24
Contract Settlement Issues ...................................................................................................................... 25

Summary
The information provided by REALTORS based on their client interactions indicates
that the real estate market remained broadly strong in many local markets in June 2015.
Sustained job creation, the reduction in FHAs annual mortgage insurance premiums, and the
availability of three percent downpayment on conventional loans are factors that appear to be
driving homebuying demand. However, there were some reports that rising interest rates have
slowed various markets.
The REALTORS Confidence Index Current Conditions and REALTORS Confidence
Index Six-Month Outlook indeces were above 50 for single-family and townhome sales but fell
below 50 for condominium sales. An index greater than 50 indicates that the number of
respondents who viewed the market as strong outnumbered those who viewed the market as
weak. The REALTORS Buyer Traffic Index was also above 50, while the REALTORS
Seller Traffic Index remained below 50, an indication of tight supply across many local markets.
With strong demand amid tight supply, properties typically sold within 34 days nationally. Firsttime home buyers accounted for 30 percent of sales. Cash sales slid to 22 percent of sales as
purchases for investment purposes dipped to12 percent and distressed properties dropped to eight
percent of sales.
Respondents noted several issues weighing down the markets momentum:
o Tight inventory.
o Affordability issues: fewer affordable homes, so sellers are also hesitant to move.
o Financing issues: difficulty in qualifying for a mortgage due to higher FICO credit score
and downpayment standards, protracted mortgage approval process, and condominiumfinancing issues.
o Appraisal issues: conservative estimates, out-of-town appraisers, and slow turn-around.
o TRID regulations that may delay closing/settlement of transactions.
o Rising interest rates.
o Declining demand from international buyers due to a strong U.S. dollar.
o Uncertainty about flood insurance rates and reform.
June 2015 REALTORS Confidence Index Survey Highlights
RCI Current Conditions: Single-family Sales
RCI Six-Month Outlook: Single-family Sales
RCI Buyer Traffic Index
RCI Seller Traffic Index
1
First-time Buyers, as Percent of Sales
Sales to Investors, as Percent of Sales
Cash Sales, as Percent of Sales
Distressed Sales, as Percent of Sales
Median Days on Market
Median Expected Price Growth in Next 12 Months (%)

June 2015
73
72
67
48
30
12
22
8
34
3.4

May 2015
73
74
68
48
32
14
24
10
40
3.6

June 2014
62
63
58
44
28
16
32
11
44
3.6

1 - NARs 2014 Profile of Home Buyer and Sellers (HBS) reports that among primary residence home buyers, 33 percent were first-time
home buyers. The HBS surveys primary residence home buyers, while the monthly RCI Survey surveys REALTORS and captures
purchases for investment purposes and vacation/second homes.

I. Market Conditions
REALTORS Broadly Reported Strong Markets
REALTORS generally continued to report strong local market conditions in June
2015 for single-family and townhome properties, with the confidence indices settling at higher
levels compared to the same period last year and at about the same levels as in May 2015. The
confidence index for single-family homes was unchanged at 73 (73 in May 2015; 62 in June
2014). The index for townhomes was also substantially unchanged at 53 (52 May 2015; 44 in
June 2014). The index for condominiums stayed below 50 at 48 (47 in May 2015; 39 in June
2014). A confidence index above 50 indicates that the number of respondents who viewed their
markets as strong outnumbered those who viewed their markets as weak.2
REALTORS Confidence Index Current Conditions
as of June 2015
(50="Moderate" Conditions)
80
70
60
50
40
30
20
10
0

73
53

200801
200805
200809
200901
200905
200909
201001
201005
201009
201101
201105
201109
201201
201205
201209
201301
201305
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201401
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201501
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48

Single-Family

Townhome

Condominium

REALTORS Remain Generally Confident About the Outlook in the Next Six Months
In June 2015, REALTORS were by and large strongly confident about the outlook
over the next six months compared to a year ago, although confidence appears to have eased
somewhat compared to May.3 In the single-family market, the REALTORS Confidence Index
Six-Month Outlook eased to 72 (74 in May 2015; 63 in June 2014). The index for townhomes
slid to 53 (55 in May 2015; 46 in June 2014). The index for condominiums dipped to 49 after
four months at being 50 or higher (50 in May 2015; 41 in June 2014). An index greater than 50
indicates that the number of respondents with a strong outlook outnumbered those with a
weak outlook.

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 effects.
3
Respondents were 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?

Sustained job creation at a pace of 220 thousand jobs per month in 2015, the reduction in
the FHAs annual mortgage insurance premium rates which took effect January 2015,4 and the
acceptance of Fannie Mae and Freddie Mac of three percent downpayment loans since early this
year appear to be facilitating improved market confidence. However, REALTOR respondents
expressed concern that the TILA-RESPA Integrated Disclosure (TRID) regulations, which take
effect October 3, 2015, may lead to delayed closings.5 Still, about 85 percent of respondents
reported taking steps to deal with the impending changes, such as attending seminars, educating
their clients, or making changes to their model contracts to accommodate the TRID disclosure
timelines. In another NAR survey of mortgage originators, 60 percent indicated they have
unanswered questions about the new forms, and 67 percent reported they expect the rules to
delay some closings.6
REALTORS Confidence Index Six-Month Outlook
as of June 2015
(50="Moderate" Outlook)
80

72

60

53

40

49

20
200801
200805
200809
200901
200905
200909
201001
201005
201009
201101
201105
201109
201201
201205
201209
201301
201305
201309
201401
201405
201409
201501
201505

Single-Family

Townhome

Condominium

The following maps show the REALTOR Confidence Index Six-Month Outlook across
property types by state.7 In the case of single-family homes, all states registered an index greater
than 50, which means that the number of respondents who had a strong outlook outnumbered
those with weak outlook. Despite the drop in oil prices, the real estate market remained very
strong in states with significant oil/shale industries such as North Dakota, Texas, Alaska, and
Oklahoma where the indices were above 75.
In the case of townhomes and condominiums, the outlook over the next six months was
very strong in Colorado, Wyoming, and Nebraska. The outlook for homebuying activity for
4

U.S. Department of Housing and Urban Development, Mortgagee Letter 2015-01.

http://portal.hud.gov/hudportal/documents/huddoc?id=15-01ml.pdf
5
TRID prescribes simplified disclosure forms that the lender needs to deliver to the loan applicant after a loan application is
received (Loan Estimate) and before a loan is consummated (Disclosure Form) within prescribed business days and waiting
periods. The objective is to help consumers understand the key features, costs, and risks of the mortgage loan for which they are
applying. See the Consumer Financial Protection Bureaus guidelines at http://www.consumerfinance.gov/regulatoryimplementation/tila-respa/
6
Ken Fears, New Closing Docs-A Problem This Summer?. http://economistsoutlook.blogs.realtor.org/2015/06/10/new-closingdocs-a-problem-this-summer/
7
The market outlook for each state is based on data for the last three months to increase the observations for each state. Small
states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C. may have less than 30 observations.

condominiums and townhomes was strong in California, Oregon, and Washington where
technology-related jobs have been growing robustly. REALTORS continued to have strong
outlook in Texas despite the slump in oil prices. In Virginia and West Virgina, the levels of
confidence were broadly moderate. Among all property types, the condominium market is the
weakest, with REALTORS reporting about condominium financing issues for both FHAinsured and the GSE-backed loans.8
REALTORS Confidence Index: Outlook Over the Next Six Months for Single-Family Homes
April -June 2015

FHA and the GSEs have financing eligibility criteria relating to ownership occupancy requirements, delinquent dues, project
approval process, and use for commercial space. See the Statement of NAR Submitted for the Record to the Senate Committee
Housing and Banking Affairs on December 9, 2014 at http://www.ksefocus.com/billdatabase/clientfiles/172/1/2180.pdf

REALTORS Confidence Index: Outlook Over the Next Six Months for Townhomes
April-June 2015

REALTORS Confidence Index: Outlook Over the Next Six Months for Condominiums
April-June 2015

REALTORS Generally Reported Improving Buyer and Seller Traffic

REALTORS generally reported strong buyer traffic in their local markets in June
2015.9 The Buyer Traffic Index was essentially unchanged at 67 (68 in May 2015; 58 in June
2014). An index greater than 50 indicates that more respondents viewed traffic as strong than
those who viewed traffic as weak. Sustained job creation of about 220,000 jobs monthly, lower
annual mortgage insurance premiums for FHA-insured loans, and the availability of three
percent downpayment on conventional loans are factors that are likely propping up homebuying
activity. However, there were some reports that the increase in interest rates to above four
percent has slowed some markets (e.g., Texas, Washington, and Maine).
Seller traffic was still broadly weak although slightly improving. The Seller Traffic
Index was unchanged at 48 compared to the previous month, although higher compared to a year
ago (48 in May 2015; 44 in June 2014). Construction of new homes is short of about 400,000
units relative to the normal annual pace of 1.5 million units required arising from household
formation and the replacement of obsolete housing. REALTORS reported a severe inventory
shortage in most areas, especially for properties in the lower price range and for those that are
move-in ready.
In most states, the level of supply, measured by the REALTORS Seller Traffic Index, is
low compared to the level of demand, measured by the REALTORS Buyer Traffic Index. The
supply gap is most severe in states such as Colorado, Massachusetts, Nebraska, Washington,
Ohio, Indiana, South Dakota, and Oregon. Supply remains also tight in California, Florida, the
District of Columbia, and Texas. Meanwhile, respondents reported improving inventory
conditions in New York, Pennsylvania, Connecticut, Virginia, Maryland, and Delaware.
REALTORS Buyer and Seller Traffic Indexes as of June 2015
(50="Moderate" Conditions)
80

67

70
60

48

50
40
30

200801
200805
200809
200901
200905
200909
201001
201005
201009
201101
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201109
201201
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201301
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201401
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201501
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20

Buyer Traffic Index

Seller Traffic Index

Respondents were asked How do you rate the past month's traffic in the neighborhood(s) or area(s) where you make most of
your sales? The responses were Strong, Moderate, and Weak.

REALTORS Buyer Traffic Index

April-June 2015

REALTORS Seller Traffic Index

April-June 2015

NAR also tracks data on the number of properties shown by REALTORS using
Sentrilock, LLC data. Foot traffic continued to show strength in June, the sixth consecutive
9

month of expansion. Although showings do not necessarily translate into sales, foot traffic has a
strong correlation with future contracts and home sales.10

61 Percent of REALTORS Reported Higher Prices from a Year Ago

Home prices have risen at an increasingly faster pace in 2015. 61 percent of respondents
reported rising prices compared to only 43 percent in December 2014 (60 in May 2015; 68 in
June 2014). About 16 percent of sales reported by the respondents sold at a net premium over the
listing price. At the beginning of the year, 11 percent of sales sold at a net premium.
The median price of all existing homes sold in the U.S. as of May 2015 was $228,700, an
increase of eight percent on an annual basis. A year ago, prices were increasing at the rate of four
percent. Nationally, prices are still below the peak level of $230,400 in July 2006. Strong
demand amid tight supply has pushed up prices. While rising prices is lifting homeowners out of
negative equity, the strong price recovery amid modest growth in incomes is also making homes
less affordable. Still, homes are generally affordable: in May 2015, the median family income of
$66,608 was higher than the qualifying income to purchase a house of $41,712.

10

For more information on the Foot Traffic Index based on Sentrilock, LLC data, please visit:
http://www.realtor.org/infographics/foot-traffic

10

Percentage Distribution of Price Change from a Year Ago

Reported by REALTOR Respondents as of June 2015
80%
70%
60%
50%
40%
30%
20%
10%
0%

61%
31%

Higher

Lower

201505

201503

201501

201411

201409

201407

201405

201403

201401

201311

201309

201307

201305

201303

201301

201211

201209

201207

201205

201203

8%

Unchanged

Percent of Properties Sold at a Net Premium Compared to

the Listing Price as Reported By REALTORS as of June 2015
25%
20%

16%

15%
10%
5%
201506

201504

201502

201412

201410

201408

201406

201404

201402

201312

201310

201308

201306

201304

201302

201212

0%

REALTORS Expect Prices to Increase Modestly in Next 12 Months

REALTORS who responded to the June 2015 survey expect prices to increase by 3.4
percent over the next 12 months (3.6 percent in May 2015; 3.6 percent in June 2014).9
Since all real estate is local, price expectation varied across local markets and states. The
map shows the median expected price change in the next 12 months for each state based on the

A comparison of the expected price growth for the next 12 months compared to the actual price growth shows the expected
price growth to be more conservative than the actual price growth, but both are headed in the same direction.

11

April 2015June 2015 RCI surveys.11 REALTOR respondents from Colorado and Florida had
the most upbeat price expectations, with a median expected price growth in the range of five to
seven percent. In California, Nevada, Washington, Oregon, Texas, Minnesota, Georgia, New
Hampshire, and the District of Columbia, the median expected price growth was four to five
percent. Prices are expected to increase at a modest pace of less than three percent in many
Northeast states as well as in the West North Central states.
Median Expected Price Change of REALTORS in Next 12 Months, By State
April-June 2015

Properties Stayed on the Market at 34 Days

With tight inventory, properties that closed in June 2015 were typically on the market for
a relatively short period of time at 34 days (40 days in May 2015; 44 days in June 2014).12
Short sales were on the market for the longest time at 129 days, while foreclosed
properties typically stayed on the market at 39 days. Non-distressed properties were on the
market at 33 days.

11

In generating the median price expectation 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 less than 30 observations.
12
Respondents were asked For the last house that you closed in the past month, how long was it on the market from listing to
the time the seller accepted buyer's offer? The median is the number of days where half of the properties were on the market for
more than the median and the other half of properties were on the market for less than the median number of days.

12

Median Days on Market of Sales Reported By REALTOR

Respondents as of June 2015
200
All: 34

Foreclosed: 39

Shortsale: 129

Not distressed: 33

150
100
50

201105
201107
201109
201111
201201
201203
201205
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201209
201211
201301
201303
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201311
201401
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All

Foreclosed

Short Sales

Not Distressed

Approximately 47 percent of properties were on the market for less than a month when
sold (45 percent in May 2015; 42 percent in June 2014).

Percentage Distribution of Time on Market of Sales Reported

by REALTOR Respondents as of June 2015
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

47%

17%
10%

7%
3%

3%

4%

3%

5%

<1 mo 1 to < 2 2 to < 3 3 to < 4 4 to < 5 5 to < 6 6 to < 9 9 to < >=12

mos
mos
mos
mos
mos
mos 12 mos mos
201406

201505

201506

Properties typically sold within a month in Alaska,Washington, Oregon, California, Utah

Colorado, North Dakota, Kansas, Texas, Minnesota, Michigan, Massachusetts, and the District
of Columbia. All real estate is local. State-level data is provided for REALTORS who may
want to compare local markets against the state and national summary.

13

Median Days on Market for Sales Reported by REALTORS, By State

April-June 2015

II. Buyer and Seller Characteristics

Sales to First Time Buyers: 30 Percent of Sales
First-time home buyers made up 30 percent of existing home sales in June 2015,
statistically about the same as in May (32 percent in May 2015; 28 percent in June 2014).13
Sustained job creation (11.5 million jobs created since October 2010, offsetting the 9.1 million
jobs lost in 2007-2010), lower FHA annual mortgage insurance premium rates since January
2015, and the availability of three percent downpayment on conventional loans backed by Fannie
Mae and Freddie Mac at the beginning of the year appear to be positively impacting first-time
home buyers.
There were reports that the rise in interest rates to above four percent has slowed some
markets (e.g, Texas, Washington, and Maine). The 30-year fixed mortgage rate tipped to the four
percent level in June, but the increase in monthly mortage payments was relatively minimal,
13

First time buyers accounted for about 33 percent of all home buyers based on data from NARs 2014 Profile of Home
Buyers and Sellers (HBS). 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. The RCI Survey is a survey of REALTORS about their transactions and captures
purchases for investment purposes and second homes for existing homes.

14

about $35 for a $200,000 mortgage. REALTORS have also reported that homes are
increasingly becoming unaffordable, and that sellers are reluctant to move because they cant
find affordable homes. The median home price for a single-family home rose by nine percent in
May 2015 from a year ago, while the median household income increased by two percent.
First Time Buyers as Percent of Market as of June 2015
60%
50%
40%

30%

30%
20%
10%
201506

201502

201410

201406

201402

201310

201306

201302

201210

201206

201202

201110

201106

201102

201010

201006

201002

200910

200906

200902

200810

0%

Year-on-year Percent Change in Median Home Price and

Median Household Income as of May 2015
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%

9%

199101
199201
199301
199401
199501
199601
199701
199801
199901
200001
200101
200202
200301
200401
200501
200601
200701
200801
200901
201001
201101
201201
201301
201401
201501

2%

Median Price, Single-Family Home

Median Household Income

Buyers age 34 and under accounted for 28 percent of sales reported by the respondents,
up from about 24 percent in July 2014 (this question was not asked in the June 2014 survey).

15

Age Distribution of Buyers for Sales Reported by REALTOR

Respondents as of June 2015
100%
80%
60%

22% 26% 23% 26% 25% 24% 23% 25% 24% 23% 23% 23% 21% 20% 21% 22%

52% 49% 53% 46% 51% 47% 48% 47% 46% 50% 50% 50% 48% 52% 50% 50%

40%
20%

26% 25% 24% 28% 24% 29% 29% 28% 31% 26% 27% 28% 31% 28% 29% 28%

Age 34 and under

Age 35-55

201506

201505

201504

201503

201502

201501

201412

201411

201410

201409

201408

201407

201404

201311

201309

201307

0%

56+

Renters accounted for 40 percent of sales, up from 36 percent in August 2014 when the
question was first asked in the RCI survey. Although rents are rising faster than mortgage
payments, the rentership rate has remained elevated, likely due to a mix of factors related to
lifestyle choice, household formation, financial constraints for younger households, and tighter
underwriting standards.

9%

9%

9%

9%

9%

9%

9%

8%

7%

8%

8%

55%

54%

54%

53%

54%

53%

53%

51%

54%

52%

52%

36%

38%

37%

38%

37%

38%

38%

41%

39%

40%

40%

201409

201410

201411

201412

201501

201502

201503

201504

201505

201506

100%

201408

Living Status of Home Buyers at Time of Home Purchase of

Sales Reported by REALTORS as of June 2015

80%
60%
40%
20%
0%

Lives with parents, relatives, or friends

Rents an apartment or house

Lives in own home

Sales data compiled for the January-June 2015 timeframe showed that among buyers 34
years and under, 86 percent purchased single-family homes, compared to the 77 percent rate for
buyers 56 years and older. REALTORS have also reported a demand for 55 and older
community housing as the large baby boomer population now begins to move into retirement.
16

Type of Residential Property Purchased by Age Group

Jan-June 2015
100%

7%
7%

8%
6%

86%

86%

Age 34 and under

Age 35 - 55

80%

16%
7%

9%
6%

77%

84%

Age 56+

All

60%
40%
20%
0%

Single-Family

Townhome

Condominium

Sales for Investment Purposes: 12 Percent of Sales

Approximately 12 percent of REALTORS reported that their last sale was for
investment purposes (14 percent in May 2015; 16 percent in June 2014). Purchases for
investment purposes have been on the decline with fewer distressed sales on the market. At their
peak in 2012-2013, investment sales were approximately 20 percent of sales.
Sales to Investors as Percent of Market as of June 2015
30%
25%
20%

12%

15%
10%
5%
201506

201502

201410

201406

201402

201310

201306

201302

201210

201206

201202

201110

201106

201102

201010

201006

201002

200910

200906

200902

200810

0%

About 62 percent of investment purchases are of buyers 35 to 55 years old. About eight
percent of buyers 34 years and under purchased properties as an investment.

17

Age of Investor Buyers Reported by REALTORS

as of June 2015
100%
80%

30%

32%

29%

62%

59%

62%

8%

9%

8%

2013

2014

2015

60%
40%
20%
0%

Age 34 and under

Age 35 - 55

Age 56+

Distressed Sales: Eight Percent of Sales

With rising home values and fewer foreclosures, the share of sales of distressed
properties continued to decline. In June 2015, distressed sales accounted for eight percent of
sales (10 percent in May 2015; 11 percent in June 2014). About six percent of reported sales
were foreclosed properties, and about two percent were short sales.14 Distressed sales accounted
for about a third to a half of sales until 2011. Distressed sales have fallen with fewer properties in
foreclosure (907,000 properties in foreclosure as of the first quarter of 2015 from a peak of two
million properties in 2010).15 Fewer distressed sales and foreclosures improves home values,
creating more home equity for the homeowner.

14
15

The survey asks respondents to report on the characteristics of the most recent sale for the month.
Mortgage Bankers Association, seasonally adjusted data.

18

Distressed Sales, As Percent of Sales Reported by REALTOR

Respondents as of June 2015
60%

Foreclosed: 6% Shortsale: 2%

50%
40%
30%
20%
10%

Foreclosed

201506

201502

201410

201406

201402

201310

201306

201302

201210

201206

201202

201110

201106

201102

201010

201006

201002

200910

200906

200902

200810

0%

Short Sale

Foreclosed property sold at a 15 percent average discount, while short sales sold at an
average of 18 percent discount. For the past 12 months, distressed properties in above average
condition were discounted by an average of 10-11 percent, while properties in below average
condition were discounted at an average of 17-19 percent.
Mean Percentage Price Discount of Distressed Sales Reported
by REALTOR Respondents as of June 2015
25%
18%

20%
15%

15%

10%
5%

Foreclosed

201506

201502

201410

201406

201402

201310

201306

201302

201210

201206

201202

201110

201106

201102

201010

201006

201002

200910

200906

200902

0%

Shortsale

19

Mean Percent Price Discount by Property Condition

of Distressed Sales Reported by REALTOR Respondents
Average for July 2014-June 2015
25%
19%

20%

17%

15%

11%

10%

12%

10%

11%

5%
0%
Above average

Average
Foreclosed

Below average

Short sale

Cash Sales: 22 Percent of Sales

The share of cash sales to the market has declined compared to the levels seen in 20102014. Approximately 22 percent of REALTOR respondents reported that their last transaction
was a cash sale (24 percent in May 2015; 32 percent in June 2014). Buyers of homes for
investment purposes, second homes, and foreign clients are more likely to pay cash than firsttime home buyers. As sales to investors and distressed properties have fallen, the share of cash
sales has declined as well.
Cash Sales as Percent of Market as of June 2015
40%
35%
30%

22%

25%
20%
15%
10%
5%

201506

201502

201410

201406

201402

201310

201306

201302

201210

201206

201202

201110

201106

201102

201010

201006

201002

200910

200906

200902

200810

0%

20

Percent of Sales That are All-Cash By Type of Buyer

June 2015
70%

67%

66%

60%

53%

50%

48%

40%
30%
19%

20%

7%

10%
0%
International

Investor

Distressed
Sale

Second
home

Relocation

FTHBuyer

Among mortgage sales reported by the respondents, 39 percent had a downpayment of at

least 20 percent, about the same since 2011 when NAR started collecting this data. Among
mortgage sales for first-time home buyers, 66 percent had downpayment terms of zero to six
percent, down from 77 percent of in 2009. The decreased share of low downpayment loans is one
indicator that access to credit has become more difficult for borrowers who cannot afford to put
in a higher downpayment.
Percent of Mortgage Sales With Downpayment of
At Least 20 Percent as of June 2015
39%

201104
201106
201108
201110
201112
201202
201204
201206
201208
201210
201212
201302
201304
201306
201308
201310
201312
201402
201404
201406
201408
201410
201412
201502
201504
201506

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

21

Percent of First-time Buyers Obtaining a Mortgage Who Had

a Down Payment of 0-6% as of June 2015*

77%
66%

200906
200909
201002
201005
201008
201011
201102
201105
201108
201111
201202
201205
201208
201211
201302
201305
201308
201311
201402
201405
201408
201411
201502

90%
85%
80%
75%
70%
65%
60%
55%
50%

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

International Transactions: Less than Two Percent of Residential Market

Less than two percent percent of respondents reported their last sale was a purchase by a
foreigner not residing in the U.S. International buyers frequently pay cash and have typically
purchased properties above the market median price. Based on NARs 2015 Profile of
Homebuying Activity of International Clients, Florida, California, Texas, and Arizona are the
major destinations.

Sales to International Clients as Percent of Market

as of June 2015
4.0%
3.5%
3.0%
2.5%
2.0%

1.4%

1.5%
1.0%
0.5%
201003
201006
201009
201012
201103
201106
201109
201112
201203
201206
201209
201212
201303
201306
201309
201312
201403
201406
201409
201412
201503
201506

0.0%

22

Rents Continue to Increase

Rents continue to increase. About 61 percent of REALTOR respondents reported rising
rent, (57 percent in May 2015; 55 percent in June 2014). Rising rents indicate continued strong
demand for rental properties rather than a house purchase. Although rents are rising faster than
mortgage payments, the rentership rate has remained elevated, likely due to a mix of factors such
as lifestyle choice, financial constraints for younger households, and tighter underwriting
standards.
Percent of REALTOR Respondents Reporting Rising Rent
Levels Compared to 12 Months Ago as of June 2015
70%
61%

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

201506

201503

201412

201409

201406

201403

201312

201309

201306

201303

201212

201209

201206

201203

201112

201109

201106

201103

201012

0%

Rent Growth Has Outpaced Mortgage Payment Growth

Since 2000 (2000Q1=100) as of 2015 Q1
143

150
130
110

95

90
70

Mortgage Payment (2000Q1=100)

2015Q1

2014Q2

2013Q3

2012Q4

2012Q1

2011Q2

2010Q3

2009Q4

2009Q1

2008Q2

2007Q3

2006Q4

2006Q1

2005Q2

2004Q3

2003Q4

2003Q1

2002Q2

2001Q3

2000Q4

2000Q1

50

CPI-Shelter Index (2000Q1=100)

Source: NAR, BLS downloaded on Haver Analytics

23

III. Current Issues

Credit Conditions
REALTORS have reported that credit conditions remain generally tight, with
significant loan processing delays. One indicator of credit tightness is the distribution of FICO
scores on approved loans.
About 50 percent of REALTORS providing transaction credit score information
reported FICO credit scores in the range of 740+. For comparison, in the period 1999-2004, only
37 percent of Fannie Maes and 33 percent of Freddie Macs 30-year, fixed rate, fully amortizing
loans had FICO scores greater than 750.16
Percentage Distribution of FICO Scores Reported by
REALTOR Respondents as of June 2015
70%
60%
50%
40%
30%
20%
10%
0%

50%
48%

< 620

620-740

201504

201502

201412

201410

201408

201406

201404

201402

201312

201310

201308

201306

201304

201302

201212

201210

201208

201206

201204

201202

2%

740+

Among first-time home buyers, 69 percent of buyers were reported to have FICO scores
of 740 or higher. The bulk of borrowers with FICO scores of less than 740 availed of low
downpayment loans (zero to six percent) while borrowers with FICO scores of 740+ put in a
higher downpayment.

16

Source: Urban Institute Housing Finance Policy Center, Housing Finance at a Glance, May 2015 chartbook.
http://www.urban.org/sites/default/files/alfresco/publication-pdfs/2000231-Housing-Finance-At-A-Glance-Monthly-ChartbookMay-2015.pdf

24

Percentage Distribution of FICO Credit Scores for First-time and

Non-first- time Buyers Reported by REALTORS in Jan-June 2015
60%

56%

50%
40%

31%

30%

24%

17%

20%
10%

14%

7%

3% 1%

25% 22%

0%
below 620

620-659

660-699
Yes

700-739

740+

No

Downpayment By Credit Scores For Buyers Obtaining

Mortgages in Jan-June 2015
Downpayment (in %)

100%

3%
3%
4%

12%
5%
5%

80%

8%
2%
9%

17%
6%
12%

8%
13%

60%
40%

90%

79%

35%

81%

66%
44%

20%
0%
below 620
0-6%

620-659

660-699

700-739

740+

FICO Score Range

7-10%
11-19%
20-99%

Contract Settlement Issues

In reporting on their last contract during the three month time period April-June 2015 that
went into settlement or was terminated, REALTORS reported that 63 percent of contracts were
settled on time, 29 percent had delayed settlement, and seven percent were terminated.
Of all contracts settled/terminated, 49 percent faced some type of issue: 16 percent had
financing issues, nine percent had appraisal issues, and nine percent had home inspection issues.
Among contracts that had a delayed settlement (29 percent), financing issues were the
primary cause of contract delays at 39 percent.
Among contracts that were terminated (seven percent), financing and home inspection
issues were the major causes at 31 percent and 25 percent respectively.
25

Settlement of Most Recent Sales Contract in

April-June 2015
100%
80%

8%

7%

9%

10%

9%

7%

26%

27%

26%

26%

28%

29%

65%

67%

65%

64%

63%

63%

201501

201502

201503

201504

201505

201506

60%
40%
20%
0%
Contract was terminated
Contract was delayed but eventually went into settlement
Contract was settled on time

Problems Encountered for Contracts That Went Into Settlement or

Were Terminated in April-June 2015 *
51%

No problems encountered
Issues related to obtaining financing

16%

Home inspection/environmental issues

9%

Appraisal issues

9%

Contingencies stated in the contract

4%

Titling/deed issues

4%

Issues in buy/sell distressed property

3%

Home/hazard/flood insurance issues

1%

Buyer lost job

1%

Other

12%

* Will not sum to 100 percent because multiple responses are allowed. "Other" includes buyer
or seller backing out, builder delays, HOA issues, pricing issues, issues in buying/selling
distressed property, etc.

26

Problems Encountered for Contracts That Were Delayed But Eventually

Went Into Settlement in April-June 2015*
(Delayed Contracts Represent 29 Percent of Closed or Terminated Contracts)
Issues related to obtaining financing
Appraisal issues
Titling/deed issues
Home inspection/environmental issues
Contingencies stated in the contract
Issues in buy/sell distressed property
Home/hazard/flood insurance issues
Buyer lost job
Other

39%
16%
11%
9%
8%
6%
2%
0%
25%

* Will not sum to 100 percent because multiple responses are allowed. "Other" includes buyer or
seller backing out, builder delays, HOA issues, pricing issues, documentation issues, issues in
buying/selling distressed property,etc.

Problems Encountered for Contracts That Were Terminated in

April-June 2015*
(Terminated Contracts Represent 7 Percent of Closed or Terminated Contracts)
Issues related to obtaining financing

31%

Home inspection/environmental issues

25%

Appraisal issues

10%

Issues in buy/sell distressed property

9%

Contingencies stated in the contract

8%

Buyer lost job

Titling/deed issues
Home/hazard/flood insurance issues
Other

5%
2%
1%
24%

*Will not sum to 1 00 percent because multiple responses are allowed. "Other" includes buyer or
seller backing out, builder delays, HOA issues, pricing issues, documentation issues, issues in
buying/selling distressed property,etc.

27

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 the purpose of 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
Also follow NAR Research on
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NATIONAL ASSOCIATION of REALTORS

Research Division
500 New Jersey Avenue, NW
Washington, DC 20001
202.383.1000
28