REALTORS CONFIDENCE INDEX

Report on the August 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
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 August
2014 report is based on the responses of 3,360 REALTORS about their transactions in August
2014.
1
Responses were received from September 1 -10, 2014. Questions about the
characteristics of the buyer and the sale are based on the REALTORS last transaction for
August, 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.

Jed Smith, Managing Director, Quantitative Research
Gay Cororaton, Research Economist
Thomas J. Doyle, Director , Marketing and Communications
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 to receive a gift card.
Table of Contents
SUMMARY .................................................................................................................................................. 1
I. Market Conditions .................................................................................................................................... 2
REALTORS Confidence is Unchanged in August 2014 ...................................................................... 2
REALTORS Buyer Traffic Index Is Unchanged in August 2014 ......................................................... 5
66 Percent of REALTORS Report Rising Home Prices in August 2014 ............................................ 5
REALTORS Expect Prices to Increase Modestly in the Next 12 Months ............................................ 7
Properties Typically Sold Within 53 Days in August 2014 ...................................................................... 8
II. Buyer and Seller Characteristics .............................................................................................................. 9
Sales to First Time Buyers: 29 Percent of Sales ...................................................................................... 9
Cash Sales: 23 Percent of Sales ............................................................................................................ 11
Most First time Home Buyers Pay Low Down Payment ........................................................................ 12
Sales for Investment Purposes: 12 Percent of Sales ............................................................................... 12
Second-home Buyers and Relocation Sales: Still Weak ......................................................................... 13
Distressed Sales: 8 Percent of Sales ........................................................................................................ 14
International Transactions: 2 Percent of Residential Market ................................................................. 16
Rising Rents for Residential Properties .................................................................................................. 17
III. Current Issues ........................................................................................................................................ 17
Reasons For Not Closing A Sale ............................................................................................................ 17
Tight Credit Conditions and Slow Lending Process ............................................................................... 18
IV. Commentaries by NAR Research ......................................................................................................... 19
Consumer Confidence: Highest In Nearly Seven Years ......................................................................... 19
Foot Traffic Diffusion Index Continues to Increase in August ............................................................... 21
A Look at Existing Home Sales Market Over the Past Decade .............................................................. 22







Page | 1

SUMMARY

REALTORS assessments of real estate market conditions in 2014 and their outlook
for the next six months were essentially unchanged from the July 2014 survey. Broadly, the
confidence and buyer indexes indicate that there are more REALTORS who view their local
market as strong than those who view their local markets as weak. There were reports that in
some areas, market activity fell in August, which respondents attributed to seasonal factors such
as school openings. Supply constraints were reported to be easing in more states than reported
previously ( in AZ, CA, DE, FL, GA, IN, ID , MD, ME, MI, MN, NC, NV, NY, TX, VA, WI),
although inventory was still generally tight as reflected in the supply index that is still tracking
below 50. Supply was reported to be tight especially for lower and middle-priced homes,
given fewer listings for distressed properties and with the strong price appreciation since 2012
that has made homes less affordable. Purchases by first-time buyers accounted for about the
same share of the market as buyers continued to face difficulty in obtaining loans under tougher
credit standards. With rising home prices, the share of purchases for investment purposes
dropped significantly in August. With investors typically paying cash, the share of cash sales to
total sales also dropped. With slightly improving inventory, properties stayed on the market
longer, and REALTORS expected a modest price increase in the coming 12 months.

August 2014 REALTORS Confidence Index Survey Highlights
August
2014
July
2014
August 2013
RCI Current Conditions: Single Family Sales /1 60 60 69
RCI- 6 Month Outlook: Single Family Sales /1 61 60 66
RCI Buyer Traffic Index /1 55 55 62
RCI-Seller Traffic Index /1 44 44 44
First-time Buyers, as Percent of Sales (%) 29 29 28
Cash Sales, as Percent of Sales (%) 23 29 32
Sales to Investors, as Percent of Sales (%) 12 16 17
Distressed Sales, as Percent of Sales (%) 8 9 12
Median Days on Market 53 48 43
Median Expected price growth in next 12 months (%) 3.5 3.4 4.2
/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 is Unchanged in August 2014

Confidence about current market conditions was unchanged in August 2014 compared to
July 2014 . In the single family market, the REALTORS Confidence Index - Current
Conditions for single family homes stayed at 60 (60 in July) which indicates that broadly, there
are more respondents who view their markets as strong compared to those who view them as
weak.
2
There were reports that in some areas market activity fell in August, which
respondents attributed to seasonal factors such as the school opening. The indexes for
townhouses/duplexes registered and condominiums continued to be at below 50. REALTORS
have reported that the condominium market has not recovered as strongly as single family homes
because of FHA financing and occupancy regulations .



Confidence about the outlook for the next six months appeared to be slightly better in
August compared to July. The six-month Outlook Index for single family homes increased to 61
(60 in July). The indexes for townhouses and condominiums were essentially unchanged at
below 50. Difficulties in obtaining mortgages, tight inventory especially for affordable homes,
and weak job creation especially in the Midwest states (WI, IN) were the main concerns reported
by REALTORS. In some areas, the uncertainty about flood insurance rates, and the increase in
property taxes were also cited as adversely affecting sales. FHA condominium
accreditation/financing regulations continued to adversely impact condominium sales.


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.
60
43
39
0
20
40
60
80
2
0
0
8
0
1
2
0
0
8
0
5
2
0
0
8
0
9
2
0
0
9
0
1
2
0
0
9
0
5
2
0
0
9
0
9
2
0
1
0
0
1
2
0
1
0
0
5
2
0
1
0
0
9
2
0
1
1
0
1
2
0
1
1
0
5
2
0
1
1
0
9
2
0
1
2
0
1
2
0
1
2
0
5
2
0
1
2
0
9
2
0
1
3
0
1
2
0
1
3
0
5
2
0
1
3
0
9
2
0
1
4
0
1
2
0
1
4
0
5
REALTORS Confidence Index - Current Conditions--
as of Aug 2014 RCI Survey
(50="Moderate" Conditions)
SF Townhouse Condo
Page | 3


The maps show by state the outlook of respondents based on the June-August 2014
surveys. An index greater than 50 indicates that the number of respondents who had a strong
outlook outnumbered the respondents who had a weak outlook for the next 12 months. The
higher the index, the more respondents there are with strong outlook who outnumber those
who view market conditions to be weak in the next 12 months.
REALTORS(c) Confidence Index: Outlook in Next Six Months for Single-Family Homes
Based on June 2014-August 2014 RCI Surveys

61
45
40
0
20
40
60
80
2
0
0
8
0
1
2
0
0
8
0
5
2
0
0
8
0
9
2
0
0
9
0
1
2
0
0
9
0
5
2
0
0
9
0
9
2
0
1
0
0
1
2
0
1
0
0
5
2
0
1
0
0
9
2
0
1
1
0
1
2
0
1
1
0
5
2
0
1
1
0
9
2
0
1
2
0
1
2
0
1
2
0
5
2
0
1
2
0
9
2
0
1
3
0
1
2
0
1
3
0
5
2
0
1
3
0
9
2
0
1
4
0
1
2
0
1
4
0
5
REALTORS Confidence Index - Six Month Outlook--
as of Aug 2014 RCI Survey
(50="Moderate" Outlook)
SF Townhouse Condo
Page | 4

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

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

Page | 5

REALTORS Buyer Traffic Index Is Unchanged in August 2014

The Buyer Traffic Index which captures the assessment of REALTORS about buyers
traffic in their markets remained at 55 in August (same as in July). An index above 50 indicates
that more REALTOR respondents viewed traffic conditions as strong compared to those who
viewed conditions as weak.

In some areas, there were reports of slower activity in August compared to that in the
spring, which respondents attributed to the seasonal slack before the school opening.
Respondents from more states reported an improvement in supply (in AZ, CA, DE, FL, GA, IN,
ID , MD, ME, MI, MN, NC, NV, NY, TX, VA, WI), but inventory is still generally tight: the
Seller Traffic Index is still below 50 and essentially stayed flat at 44(same as in July)
3
.
REALTORS reported that supply was tight especially for lower and middle-priced homes.
With rising prices, there are fewer foreclosed properties and short sales on the market.
REALTORS also continued to report about the long process of banks in approving for short
sales. Potential sellers are also hesitant to sell because of concerns that they will not find an
affordable replacement home with adequate mortgage financing in a tight market.

NAR also tracks foot traffic using Sentrilock, LLC data. Lockboxes made by SentriLock,
LLC are used in roughly a third of home showings across the nation. For the second consecutive
month this index rose to 57 in August (54.8 in July), which indicates that more than half of the
roughly 200 markets tracked in this panel reported an increase in foot traffic ( See Section IV
Commentaries for a discussion of this index.)


66 Percent of REALTORS Report Rising Home Prices in August 2014

Home prices continued to generally increase. Approximately 66 percent of REALTOR
respondents reported that the price of their average home transaction is higher today compared
to a year ago. About 22 percent reported constant prices, and 12 percent reported lower prices.
Rising prices are an indication that inventory is still generally tight in many areas. Fewer listings
of foreclosed properties and short sales have also bolstered prices. For homeowners, rising
prices will move those in negative equity into positive territory. As of July 2014, the median
home price of an exisiting home was $222,900 , just about 4 percent shy of the peak price of
$230,400 in July 2006 prior to the housing downturn. For buyers, rising home prices have
eroded home affordability, but with mortage rates at historic lows, home prices are still at their
most affordable in decades .

3
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.


Page | 6




With inventory still generally tight, approximately 12 percent of reported sales were at a
net premium compared to the original listing price (14 percent in July 2014). In mid-2013, about
20 percent of REALTOR respondents reported selling properties at a premium. About 70
percent of properties sold at a dicount compared to the listing price, and about half percent
reported selling at a discount of less than 10 percent.


66%
12%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
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
Percentage of REALTOR Respondents Reporting Price
Change from a Year Ago--as of Aug 2014 RCI Survey
Higher Lower Unchanged
70%
18%
12%
0%
20%
40%
60%
80%
100%
2
0
1
2
1
2
2
0
1
3
0
1
2
0
1
3
0
2
2
0
1
3
0
3
2
0
1
3
0
4
2
0
1
3
0
5
2
0
1
3
0
6
2
0
1
3
0
7
2
0
1
3
0
8
2
0
1
3
0
9
2
0
1
3
1
0
2
0
1
3
1
1
2
0
1
3
1
2
2
0
1
4
0
1
2
0
1
4
0
2
2
0
1
4
0
3
2
0
1
4
0
4
2
0
1
4
0
5
2
0
1
4
0
6
2
0
1
4
0
7
2
0
1
4
0
8
Percentage Distribution of the Price Discount /Premium
On the Original Listing Price of Properties Sold by
REALTORS --as of Aug 2014 RCI Survey
Sold at Net discount Sold at Original Listing Price Sold at a Net premium
Page | 7



REALTORS Expect Prices to Increase Modestly in the Next 12 Months

REALTORS responding to the survey expected home prices to increase modestly in
the next 12 months, with the median expected price increase at 3.5 percent
4
. The expected
price change is modest compared to the strong price growth in 2012-2013. Local conditions vary,
but concerns about how borrowers are finding it difficult to obtain a mortgage and a continued
weak job recovery appear to be underpinning the modest price expectation.
The map shows the median expected price change in the next 12 months by the state of
REALTOR respondents in the June August 2014 surveys. Respondents from Florida,
Texas, and Hawaii expected prices to increase in the range of 5 to 6 percent. Tight inventory and
the strong growth in Texas metro areas may account for the optimistic outlook. Expected price
growth is more modest in other states.




4
The median expected price change is the value such that 50 percent of respondents expect prices to change
above this value and 50 percent of respondents expect prices to change below this value. A median expected price
change is computed for each state based on the respondents for that state. The graph shows the range of these state
median expected price change. To increase sample size, the data is averaged from the last three survey months.
1.6%
2.7%
2.1%
4.3%
11.6%
21.7%
25.7%
17.8%
6.9%
3.1%
1.3%
0.5%
0.3%
0.3%
0.2%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
net discount of greater than 23%
net discount of 20-23%
net discount of 16-19%
net discount of 12-15%
net discount of 8-11%
net discount of 4-7%
net discount of greater than 0 to 3 %
0% net discount or net premium
net premium of greater than 0 to 3%
net premium of 4-7%
net premium 8-11%
net premium 12-15%
net premium of 16-19%
net premium of 20-23%
net premium of greater than 23%
Percentage Distribution of Net discount or Net Premium From the
Listing Price of Sales Reported By REALTORS--
Aug 2014 RCI Survey
Page | 8

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

Properties Typically Sold Within 53 Days in August 2014

Properties typically sold within 53 days in August (48 days in July)
5
. With slightly
higher inventory compared to last year, properties stayed on the market longer compared to a
year ago (43 days). Short sales were on the market for the longest, at 135 days (93 days in July),
and foreclosed properties were on market at 53 days (58 days in July). Non-distressed
properties were on the market at 52 days (56 days in July). Conditions varied across areas.
Approximately 40 percent of respondents reported that properties were on the market for less
than a month when sold, and about 14 percent were on the market for more than six months.

5
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 | 9




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 July )
6
. Access to financing remains a

6
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.
0
50
100
150
200
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
Median Days on Market of Sales Reported By
REALTORS--as of Aug 2014 RCI Survey

All Foreclosed Short Sales Not distressed
Source: NAR, RCI Survey
All: 53 Foreclosed: 53 Shortsale: 135 Not distressed: 52
37%
17%
13%
10%
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--Aug 2014 RCI Survey
201308 201407 201408
Page | 10

major issue for most buyers, specifically in relation to meeting the credit score and
downpayment requirements to be granted a mortgage (which many REALTORS cited as 740+
and 20 percent down). Also, strong home price appreciation has outpaced wage growth and
have made homes less affordable. The effective increases in the FHA mortgage insurance
premiums were also reported to be putting an additional strain on buyers. REALTORS
commented on the difficulty of obtaining FHA financing for condominiums, which are typically
the starter homes for first-time buyers.



Most first-time buyers are in the 35 years and under age group. Among the non-first time
home buyers, 54 percent were in the 35 to 55 age group, while 33 percent were in the 56+ age
group. Those in the 35-55 age group are likely moving for family-related reasons (e.g, trading
up, new neighborhood, etc.) , while those in the 56+ age group are likely moving for reasons
related to retirement (e.g, trading down, moving to an adult community or another state).


29%
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
First Time Buyers as Percent of Market*--
as of Aug 2014 RCI Survey
*Based on most recent sale of the month of REALTOR respondents.
12%
66%
54%
29%
33%
4%
0%
20%
40%
60%
80%
100%
0-Not FT Home Buyer 1-FT Home Buyer
Age Distribution of Home Buyers Based on Sales
Reported by REALTOR Respondents in August 2014
RCI Survey*

35 and under 35 to 55 56+
* Based on the most recent sale of the month of REALTOR respondents.
Page | 11

Cash Sales: 23 Percent of Sales

Approximately 23 percent of REALTOR respondents reported that their last
transaction was a cash sale, a significant drop from the 29 percent of respondents who reported
cash sales in July.
7
The drop in cash sales appears to be tied to the decline in purchases for
investment purposes (sales to investors) which fell to 12 percent in August 2014. 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. Most
first-time homebuyers use mortgage financing.





7
The RCI Survey asks about the most recent sale for the month.
23%
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 Aug 2014 RCI Survey
* Based on most recent sale of the month of REALTOR respondents.
7%
64%
52%
18%
63%
41%
0%
10%
20%
30%
40%
50%
60%
70%
FTHBuyer Investor Second home Relocation International Distressed Sale
Percent of Sales Reported by REALTORS That are All-Cash,
by Type of Buyer-- July 2014 RCI Survey
Page | 12

Most First time Home Buyers Pay Low Down Payment

The majority of first-time home buyers who are able to obtain mortgage financing still
make a low downpayment. Among first-time buyers that REALTORS reported used
mortgage financing in the months of June August 2014, about 66 percent made a downpayment
under 6 percent
8
. Still, this is 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. Borrowers
who obtained a mortgage with a low downpayment are likely those with relatively good credit
scores or those who have saved enough to avoid paying the monthly mortgage insurance
premium payments.



Sales for Investment Purposes: 12 Percent of Sales

Approximately 12 percent of REALTOR respondents reported that their last sale was
for investment purposes (16 percent in July). Since January this year , the share of sales for
investment purposes appears to be on the decline from the historical average of about 20 percent
in recent years. Rising home prices are cutting into profits even if rents continue to rise.


8
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.
74% 66%
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 Aug 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 | 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 16 percent reported a sale for
relocation due to a job change or business move purposes , and 9 percent reported a sale to a
vacation home buyer. REALTORS reported that the economy has not improved enough to
support a strong demand from buyers for relocation and second /vacation home purposes.





12%
0%
5%
10%
15%
20%
25%
30%
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
Sales to Investors as Percent of Market*--
as of Aug 2014 RCI Survey
*Purchase of property for investment purposes.* Based on most recent sale of the month
of REALTOR respondents.
16%
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 Aug 2014 RCI Survey
*Based on most recent sale of the month of REALTOR respondents.
Page | 14




Distressed Sales: 8 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 August, distressed
sales accounted for 8 percent of sales reported by REALTORS: 6 percent of reported sales
were foreclosed properties, and about 2 percent were short sales
9
. In judicial states such as CT,
DE, IL, and SD, more distressed properties are coming into the market.
Foreclosed property sold at a 14 percent average discount to market (20 percent in July),
while short sales sold at a 10 percent average discount (14 percent in July).
10
The discount
varied by house condition. For the past 12 months, properties in above average condition
were discounted by an average of 9-13 percent, while properties in below average condition
were discounted at an average of 14-20 percent.

9
The survey asks respondents to report on the characteristics of the most recent sale for the month.
10
The estimation of the level of discount is based on an estimate of what the property would have sold for if it
had not been distressed (possibly in better condition, absent any taint of being distressed).
9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
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
Second-Home Buyers as Percent of Market*--
as of Aug 2014 RCI Survey
*Based on most recent sale of the month of REALTOR respondents.
Page | 15



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 Aug 2014 RCI Survey

Foreclosed Short Sale
Aug 2014: Foreclosed: 6% Shortsale: 2%
* Based on most recent sale of the month of REALTOR respondents.
14
10
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 Aug 2014 RCI Survey

Foreclosed Shortsale
%
%
* Based on most recent sale of the month of REALTOR respondents.
Page | 16


International Transactions: 2 Percent of Residential Market

Approximately 2 percent of REALTOR respondents reporting on their last sale was of
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.
11






11
http://www.realtor.org/topics/profile-of-international-home-buying-activity
13
14
20
9
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 Sep 2013 - Aug 2014
Foreclosed Short sale
2.3%
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
Sales to International Clients as Percent of Market*--
as of Aug 2014 RCI Survey
*Based on most recent sale of the month of REALTOR respondents.
Page | 17

Rising Rents for Residential Properties

Based on rent trends, the demand for rentals remains strong. Among those
REALTORS involved in a rental, 54 percent reported higher residential rents compared to rent
levels 12 months ago. About 21 percent of REALTORS reported conducting an apartment
rental, and about 3 percent reported a commercial rental transaction. To note, although rents
have been rising, house prices have increased at a faster clip since 2012 which further drives up
the demand for rental units.

III. Current Issues
Reasons For Not Closing A Sale

Tight supply and the difficulty in accessing credit were often cited as deterrents to home
buying. About 18 percent reported having clients who could not obtain financing in August
2014. Appraisal issues were reported as accounting for 4 percent of failures to close a sale.
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.

54%
-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 Aug 2014 RCI Survey
Page | 18



Tight Credit Conditions and Slow Lending Process

Credit continues to mostly flow to those with high credit scores. About 50 percent of
survey respondents who provided credit score information reported FICO credit scores of 740
and above. Only about 2 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
12
.

12
http://www.urban.org/UploadedPDF/413206-Housing-Finance-At-A-Glance-A-Monthly-Chartbook-
August2014.pdf

Page | 19



IV. Commentaries by NAR Research
Consumer Confidence: Highest In Nearly Seven Years
Lawrence Yun, Chief Economist
o Consumers are feeling much better and more confident in recent months: the consumer
confidence index in August rose to the highest mark in nearly seven years. Such a trend
could lead to improvement in home sales and boost demand for retail commercial spaces.
o Numerically, the index hit 92.4. The last time it was that high was right before the financial
market crisis in October 2007 when the unemployment rate was very low at 4.7 percent
(versus todays unemployment rate of 6.1 percent). The index, however, is still shy of 100,
where at least half of Americans would be saying that the economy is generally moving in
the right direction.
o For home buying, it is not only about financial capacity and mortgage rates. Confidence also
matters. People need to feel they will be better off in the future in order to make a major
expenditure. The index that captures only the future expectations was 90.9, also nearing the
crucial 100 marker.
o The very strong, high stock market has driven total household net worth to an all-time
high. However, only about 10 percent of Americans have meaningful exposure to the stock
market. Therefore the stock market is not the best gauge of economic sentiments of the
middle class. In contrast, the consumer confidence index covers a whole swath of people
across all income spectrums and therefore this index is much better in assessing the mood of
normal Americans.
o Confidence can change the world. In fact, when the Portuguese first circumnavigated the
lower tip of Africa on their way to Asia for spices, the very stormy area with constant violent
sea waves near the tip was given the scary name of Cape of Bad Storms. The King of
Portugal immediately changed the name to Cape of Good Hope in order to encourage more
11%
15%
23%
50%
0%
20%
40%
60%
80%
100%
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Distribution of FICO Scores Reported by REALTORS--
as of Aug 2014 RCI Survey
lt 620 620 - 659 660-699 700-739 740+
Source: NAR RCI Surveys
Page | 20

sailors to make the trip. Portugal and subsequently Spain rose in economic power while the
old trade route cities of Venice and Genoa lost economic power.








Page | 21

Foot Traffic Diffusion Index Continues to Increase in August
Ken Fears, Director, Regional Economics and Housing Finance Policy
Foot traffic continued its upward climb for the second consecutive month in August. The August
reading as measured by NARs diffusion index rose 2.2 points to 57.0. This reading suggests a
moderate improvement over the same period last year. The gains in the index partially reflect
this summers low mortgage rates and an adjustment by consumers to a higher rate environment,
but also the sharp decline in traffic last summer in the wake of the 1%+ increase in mortgage
rates that followed comments by then Fed Chairman Bernanke.



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 August, the diffusion index for foot traffic rose 2.2 points to 57.0, the
highest level since July of last year when it reached 59.0.

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 August 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 August of 2014 than 12 months earlier.

Two consecutive improvements in the foot traffic index are a robust indicator of relative strength
in the 2
nd
half of 2014. However, tight mortgage credit and low inventories at the entry-level
portion of the market remain a headwind to sales. In the absence of a resurgence of distressed
inventory or nascent traditional sellers, inventories may ease relative to sustained demand
through the fall as the typical seasonal pattern takes hold.


Page | 22

A Look at Existing Home Sales Market Over the Past Decade
Michael Hyman, Research Data Specialist
Every month NAR produces existing home sales, median sales price and inventory figures. The
reporting of this data is based on homes sold the previous month and the data is explained in
comparison to the same month a year ago. We also provide a perspective of the market relative
to last month, adjusting for seasonal factors, and comment on the potential direction of the
housing market.
The data below shows what our current month data looks like in comparison to the last ten Julys
and how that might compare to the ten year July average, which is an average of the data from
the past ten Julys.
o Regionally, one of the first things that sticks out is that 2005 seems to be the best year of
sales and 2010 seems to be the lowest point of sales activity. The South has been the
strongest region in terms of transactions and the Northeast has had the least amount of sales.
The difference in sales is largely a function of population differences in the regions.
o The median price year-over-year percentage change shows the West region went through the
largest fluctuation, having the highest and the lowest price growth at different points in the
ten year cycle. The West experienced its worst price percentage decline in 2009 and its best
price increase in 2012.
o Inventory of homes for sale in the U.S. peaked in 2007, with its lowest point seen just last
year. In 2010 the U.S. had the slowest pace of homes sold relative to inventory, with months
supply at 11.9. The ten year July average months supply is 7.2. In July 2014 we stand at 5.5
months supply, somewhat below a typical July.
o Julys median price is higher than the ten year July average median price for the U.S. and all
four regions. Regionally, while the Northeast and the West have recently experienced lower
than the ten year average sales, the Midwest and the South both showed modestly higher
sales. Total homes sold in the US for July 2014 is slightly higher than the ten year average,
which is a good sign for housing recovery.
Page | 23