August Future Indicators Report: Pending Sales Continued to Climb

by Contact: Eric Berman - 781-839-5507 | Sep 09, 2014
Credit problems and inability to secure financing making it difficult for
first-time buyers

WALTHAM, Mass. September 9, 2014 – Pending home sales climbed to their highest levels for any August since the Massachusetts Association of REALTORS® (MAR) began tracking homes under agreement in 2004. According to the August Future Indicators Report, there was a 15.7 percent increase in accepted offers compared to the same month the year before. Median price of homes put under agreement also went up, increasing 2.2 percent compared to August 2013.

August Pending Sales:

Single-Family

August 2014

August 2013

%Change

Sales

4,994

4,318

+15.7%

Median Price

$352,500

$345,000

+2.2%


  • 18th straight month of single-family year-over-year increases.
  • The most homes put under agreement in August since MAR has been tracking this data.

Condominium

August 2014

August 2013

%Change

Sales

1,817

1,642

+10.7%

Median Price

$325,000

$320,500

+1.4%


  • 18th straight month of condominium year-over-year increases.
  • The most number of condos put under agreement in August since 2005 when 2,170 units were put under agreement.

“A more stable economy, better jobs picture and low interest rates continue to push buyer demand in this market,” said 2014 MAR President Peter Ruffini, regional vice president at Jack Conway & Co. “We’re encouraged by new listings to the market are increasing each month, however with pending sales also increasing monthly, we need the pace to pick up to keep prices from pushing too many people out of the market.”   

REALTOR® Market and Price Confidence Indexes: 

Confidence Index

August 2014

August 2013

%Change

Market

61.15

69.26

-12%

Price

70.00

73.57

-5%


  • The tenth straight month that the RMCI has gone down.
  • The seventh straight month that the RMCI has been over the 60-point mark.
  • The fifth straight month that the RPCI has gone down.
  • The 18th straight month the RPCI was over the 70-point mark.
  • 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.    

“REALTORS® confidence in the market is again in positive territory, but is edging closer to the halfway point between a ‘strong’ and ‘weak’ market,” said Ruffini. “We continue to need pending sales to become closed sales to see confidence start to move up again.”
 
Monthly ‘Hot Topic’ Question:

The August “Hot Topic” question asked REALTORS® what was the most common issue that makes it difficult for first-time homebuyers to successfully purchase a home. The top reason cited was credit issues/inability to secure financing. The second highest reason cited was the ongoing shortage of starter homes. The third highest reason cited was the lack of a downpayment. Only one percent of respondents cited student loan debt as a primary reason.
 
“We are glad that the days of unfettered access to financing by unqualified buyers are behind us,” said Ruffini. “However, we’re not happy to see the difficulty that well-qualified buyers are having securing financing. There needs to be a workable balance and right now we’re not there yet.”


About the Data Sets:

Pending sales - The tracking of signed purchase and sales agreements (also called “pending sales”) provide reliable information about where the real estate market is heading in coming months. 

 A pending sale or a sale “under agreement” is when the buyer and seller agree on the terms of the sale of a home and have a signed purchase and sale agreement, but have yet to close and be recorded as such.  MAR is the only organization which compiles this statewide information from Multiple Listing Services each month.
 
Monthly pending (or under agreement) data and closed sales data comes from the three REALTOR®-affiliated Multiple Listing Services in Massachusetts. They are the Berkshire County Multiple Listing Service, Cape Cod & Islands Association of REALTORS® Multiple Listing Service, Inc.; and MLS Property Information Network, Inc. The data is compiled by 10K Research and Marketing, Inc. and updated each month. As a result, previous data may change after the reports have been run.

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.

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Editors and reporters: Please note that the term Realtor is properly spelled with an initial capital “R”, per the Associated Press Stylebook.