Confidence in Market Very High as Pending Home Sales Hits Another Record for the Month of April

by Eric Berman - eberman@marealtor.com - 781-839-5507 | May 10, 2016

Majority of Realtors® not seeing home appraisal issues

WALTHAM, Mass. –May 10, 2016 – The Massachusetts Association of Realtors® (MAR) reported today the home sales momentum from the winter has continued into the spring, as April pending home sales increased just over 30 percent from last year. Realtors® confidence in the market increased to the highest level since May 2013 after a year of steady increases. This month’s “Hot Topic” question finds that even with increasing home prices, the majority of Realtors® are not seeing home appraisal issues.

 April Pending Sales:

Single Family

April 2016

April 2015

% Change

Sales

7,139

5,477

30.3%

Median Price

$350,688

$325,000

7.9%

  • Pending sales have been up 37 of last 38 months
  • Most pending sales in the month of April since 2004

Condominium

April 2016

April 2015

% Change

Sales

2,782

2,448

13.6%

Median Price

$329,628

$305,000

8.1%

  • Pending sales have been up 37 of the last 38 months

“The ‘spring’ home buying season, that started in January, continued its momentum into the actual season as April hit another record month for pending sales,” said 2016 MAR President Annie Blatz, branch executive at Kinlin Grover Real Estate on Cape Cod. “More importantly, it shows that the desire to own a home in inventory-starved Massachusetts continues to be very strong.”

REALTOR® Market and Price Confidence Indexes:

Confidence Index

April 2016

April 2015

%Change

Market

82.88

82.28

0.73%

Price

76.71

80.66

-4.89%

  • The Realtor® Market Confidence Index was up for the 13th straight month
  • The Realtor® Price Confidence Index was down for the fifth time in 12 months
  • 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 Market Confidence Index reached the highest level since May 2013 this month,” said Blatz. “This reflects the busy spring market and the series of record-breaking months in sales we’ve had since the beginning of the year. Sales prices have been showing signs of moderation, but we’ll have to see how this month’s uptick affects the Price Confidence Index in the future.”

Monthly ‘Hot Topic’ Question:

The April “Hot Topic” question asked Realtors® how their 2016 first quarter transactions were impacted by appraisals that came in lower than the agreed upon sales price. Of those Realtors® who responded, 10 percent reported that all of their transactions (6.2%) or a majority of their transactions (4.1%) have had higher sales prices than the appraisal. Eleven percent of Realtors who responded said some of their transactions were impacted by appraisals that were lower than the sales price. Almost 18 percent (17.9%) reported that only one or two of their transactions had a higher sales price than appraisal, while 60 percent reported that none of their transactions had any appraisal issues.

“With a busy market and increasing prices, there is always a risk that the agreed upon sales price and appraisals could come into conflict. It’s good to see that this isn’t generally the case and that buyers and seller are coming together on realistic prices,” said Blatz.

About the Data Sets:

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” happens 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 ShowingTime 10K 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. 

  • How would you describe the current housing market?
  • 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 22,000+ 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.

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