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Rene Ferland

René Ferland
RE/MAX Accord
DRE #01043887

925-683-0112
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Real Estate News

Population and Employment Growth Fuel Homebuying in the West and South States

In a monthly survey of REALTORS®, respondents are asked “Compared to the same month last year, how would you rate the past month’s traffic in neighborhood(s) or area(s) where you make most of your sales?” Respondents rate buyer traffic as “Stronger” (100), “Stable” (50), or “Weaker” (0), and the responses are compiled into a diffusion index. An index greater than 50 means that more respondents reported “stronger” than “weaker” conditions.[1]

The chart below shows buyer traffic conditions in March–May 2018 compared to conditions one year ago, according to the  May 2018 REALTORS® Confidence Index Survey. REALTORS® reported that buyer conditions were “stable” to “very strong” compared to conditions one year ago, except in Alaska. REALTORS® reported that demand was “very strong” in May 2018 compared to the same month last year in in the District of Columbia and in 26 states, led by Wyoming, Idaho, Wisconsin, Rhode Island, Utah, New Hampshire, Ohio, Kansas, Tennessee, Minnesota, Nebraska, Michigan, Colorado, Indiana, Washington, South Carolina, and Massachusetts.

 

Housing demand is in part driven by population and employment growth. During 2010‒2017, the West and South region states had the fastest population growth, led by Texas (12.6%), North Dakota (12.3%), Utah (12.2%), Colorado (11.5%), Nevada (11.0%), and Washington (10.1%), Arizona (9.8%), Idaho (9.5%), and Oregon (8.1%).

 

The states in the West and South regions also had the strongest employment growth in May 2018 compared to one year ago. Nationally, employment rose 1.6 percent, but employment in these states rose above the national average, led by Utah (3.6%), Washington (2.9%), Idaho (2.9%), Colorado (2.8%), Arizona (2.8%), Texas (2.8%), Florida (2.2%), and West Virginia (2.6%).

 

Strong demand in these states has bolstered home prices, especially in California, which has 11 of the top 20 priciest metro areas in May 2018. Scroll down the interactive data table visualization below to check out the priciest metro areas in May 2018.

[1] In generating the indices, NAR uses 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. For graphical purposes, index values from 25.01 to 45 are labeled “Weak,” values of 45.01 to 55 are labeled “Stable,” values of 55.01 to 75 are labeled “Strong,” and values greater than 75 are labeled “Very Strong.”

MedianPriceTable_DB4

May 2018 Existing-Home Sales

  • NAR released a summary of existing-home sales data showing that housing market activity this May fell 0.4 percent from last month and dropped 3.0 percent from last year. May’s existing-home sales reached 5.43 million seasonally adjusted annual rate.
  • The national median existing-home price for all housing types was $264,800 in May, up 4.9 percent from a year ago. This marks the 75th consecutive month of year-over-year gains.
  • Regionally, three of the four regions showed growth in prices from a year ago, with the Northeast being the only region with a decline of 1.8 percent. The West led all regions with a gain of 7.2 percent. The South had a gain of 4.5 percent followed by the Midwest with the smallest gain of 4.2 percent from May 2017.

  • May’s inventory figures are up 2.8 percent from last month to 1.85 million homes for sale. However, compared with May of 2017, fewer homes are available, with inventory down 6.1 percent, marking 36 months of year-over-year declines. It will take 4.1 months to move the current level of inventory at the current sales pace. Transactions are moving faster and it takes approximately 26 days for a home to go from listing to a contract in the current housing market, down from 27 days a year ago.

  • From April, three of the four regions experienced declines in sales. The Midwest had the biggest decline of 2.3 percent followed by the West with a drop of 0.8 percent. The South had the smallest dip and fell 0.4 percent.
  • Three of the four regions showed declines in sales from a year ago. The Northeast had the biggest drop in sales of 11.7 percent. The West had a decline of 4.1 percent followed by the Midwest with a decline of 2.3 percent. The South was flat showing no change. The South led all regions in percentage of national sales, accounting for 42.7 percent of the total, while the Northeast had the smallest share at 12.5 percent.

  • In May, single-family sales declined 0.6 percent and condominiums sales rose 1.6 percent compared to last month. Single-family home sales fell 3.0 percent and condominium sales were down 3.1 compared to a year ago. Both single-family and condominiums had an increase in price with single-family up 5.2 percent at $267,500 and condominiums up 2.5 percent at $245,500 from May 2017.

REALTORS® Confidence Index Survey: May 2018 Highlights

The REALTORS® Confidence Index (RCI) survey[1] gathers monthly information from REALTORS® about local real estate market conditions, characteristics of buyers and sellers, and issues affecting homeownership and real estate transactions.[2] This report presents key results about market transactions from May 2018. View and download the full report here.

Market Conditions and Expectations

  • The REALTORS® Buyer Traffic Index registered at 73 (74 in May 2017).[3]
  • The REALTORS® Seller Traffic Index registered at 44 (46 in May 2017).
  • The REALTORS® Confidence Index—SixMonth Outlook Current Conditions registered at 72 for detached single-family, 59 for townhome, and 57 for condominium properties. An index above 50 indicates market conditions are expected to improve.
  • Properties were typically on the market for 26 days (27 days in May 2017).
  • Eighty-eight percent of respondents reported that home prices remained constant or rose in May 2018 compared to levels one year ago (90 percent in May 2017).

Characteristics of Buyers and Sellers

  • First-time buyers accounted for 31 percent of sales (33 percent in May 2017).
  • Vacation and investment buyers comprised 15 percent of sales (16 percent in May 2017).
  • Sales of distressed properties (foreclosed or sold as a short sale) accounted for 3 percent of sales (5 percent in May 2017).
  • Cash sales made up 21 percent of sales (22 percent in May 2017).
  • Seventeen percent of sellers offered incentives such as paying for providing a warranty (9 percent), closing costs (6 percent), and undertaking remodeling (2 percent).[4]

Issues Affecting Buyers and Sellers

  • From March–May 2018, 76 percent of contracts settled on time (76 percent in May 2017).
  • Among sales that closed in May 2018, 77 percent had contract contingencies. The most common contingencies pertained to home inspection (58 percent), obtaining financing (45 percent), and getting an acceptable appraisal (44 percent).
  • REALTORS® report “low inventory”, “interest rates”, and “multiple offers” as the major issues affecting transactions in May 2018.

About the RCI Survey

  • The RCI Survey gathers information from REALTORS® about local market conditions based on their client interactions and the characteristics of their most recent sales for the month.
  • The May 2018 survey was sent to 50,000 REALTORS® who were selected from NAR’s 1.3 million members through simple random sampling and to 7,495 respondents in the previous three surveys who provided their email addresses.
  • There were 4,169 respondents to the online survey which ran from June 1-12, 2018. The survey’s overall margin of error at the 95 percent confidence level is one percent. The margins of error for subgroups and sample proportions of below or above 50 percent are larger.
  • NAR weighs the responses by a factor that aligns the sample distribution of responses to the distribution of NAR membership.

The REALTORS® Confidence Index is provided by NAR solely for use as a reference. Resale of any part of this data is prohibited without NAR’s prior written consent. For questions on this report or to purchase the RCI series, please email: Data@realtors.org


[1] Thanks to George Ratiu, Managing Director, Housing and Commercial Research and Gay Cororaton, Research Economist for their data analysis and comments to the RCI Report.

[2] Respondents report on the most recent characteristics of their most recent sale for the month.

[3] An index greater than 50 means more respondents reported conditions as “strong” compared to one year ago than “weak.” An index of 50 indicates a balance of respondents

who viewed conditions as “strong” or “weak.”

[4] The difference in the sum of percentages to the total percentage of sellers who offered incentives is due to rounding.


René Ferland | 925-683-0112 | Contact Me
313 Sycamore Valley Rd West - Danville, CA 94526
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