WALTHAM, Mass. – September 17, 2013 – The Massachusetts Association of REALTORS® (MAR) reported today that the August REALTOR® Market Confidence Index (RMCI) and the August REALTOR® Price Confidence Index (RPCI) were both up again compared to the same month in 2012. The results of the August “Hot Topic” question show that REALTORS® are split on the impact that increasing interest rates are having on buyers in the market.
“We continue to see significant year-over-year gains in REALTOR® confidence in the market as we have for the past 25 months,” said 2013 MAR President Kimberly Allard-Moccia, broker-owner of Century21 Professionals in Braintree. “Considering that inventory continues to be down and interest rates have been ticking up, buyer and seller activity continues to push REALTOR® sentiment in a positive direction.”
In August 2013, the REALTOR® Market Confidence Index was 69.26, which was up 23 percent from the August 2012 score of 56.41. This is the 25th straight month of year-over-year increases, but the first time in six straight months the RMCI has dipped under the 70-point mark. On a month-to-month basis, the August RMCI was down three percent from the 71.09 score in July 2013. Measured on a 100-point scale, a score of 50 is the midpoint between a “strong” (100 points) and a “weak” (0 points) market condition.
The REALTOR® Price Confidence Index was 73.57 in August, up 15 percent from the August 2012 RPCI of 64.19. This is the 19th straight month of year-over-year increases and the sixth straight month over the 70-point mark. On a month-to-month basis, the RPCI was up two percent from the July 2013 RPCI of 72.27.
“A slight increase in interest rates can drive activity as buyers who have been hesitant will purchase before they go up more, but more significant increases has the opposite effect,” said Allard-Moccia
The monthly “Hot Topic” question asked REALTOR®-members how the increase of interest rates (of nearly one point) on the 30-year fixed-rate mortgage over the past few months has effected homebuyer activity. Thirty-seven percent of respondents reported that they saw either a significant decrease (6.6%) or a decrease (29.5%) in homebuyer activity. Thirty-nine percent reported no change in homebuyer activity, while 25 percent reported seeing an increase (19.7%) or a significant increase (4.9%) in homebuyer activity.
About the REALTOR® Index Methodology:
The Massachusetts REALTOR® Market Confidence Index (RMCI) and Price Confidence Index (RPCI) are based on monthly responses from a random sampling of Massachusetts Association of REALTORS® members on the state of the housing market. More specifically, the survey asks members two basic questions pertaining to the real estate business in their market area in Massachusetts.
1. How would you describe the current housing market?
2. What are your expectations of home prices over the next year?
In addition to these standard questions, the survey each month includes one wildcard question that changes each month and is based on an industry hot topic.
The RMCI is calculated in the following way. Respondents indicate whether conditions are, or are expected to be “strong” (100 points), “moderate” (50 points), and “weak” (0 points). The results are the average score for each question. A score of 50 is the threshold between a “strong” and a “weak” condition. Similarly, the question about home prices over the next year (REALTOR® Price Confidence Index) is calculated using five categories: “Rise 0-5%” (75 points), “Rise 5%+” (100 points), “Level” (50 points), “Fall 0-5%” (25 points), and “Fall >5%” (0 points).
About the Massachusetts Association of REALTORS®:
Organized in 1924, the Massachusetts Association of REALTORS® is a professional trade organization with more than 19,000 members. The term REALTOR® is registered as the exclusive designation of members of the National Association of REALTORS® who subscribe to a strict code of ethics and enjoy continuing education programs.
*Please note, starting with the release of the September 2012 Index data, the REALTOR® Market Index will be renamed the REALTOR® Market Confidence Index and the REALTOR® Price Index will be renamed the REALTOR® Price Confidence Index.
Editors and reporters: Please note that the term Realtor is properly spelled with an initial capital “R”, per the Associated Press Stylebook.