Massachusetts Buyers Keeping Market Active in July by Pushing Pending Home Sales Up

REALTOR® Confidence Indexes remain strong in July

WALTHAM, Mass. – August 11, 2015 – (RealEstateRama) — The Massachusetts Association of REALTORS® (MAR) reported today that the summer market has remained strong as pending home sales went up over 37 percent from the same time last year. The REALTOR® Market Confidence Index was up 20 percent from July 2014. This month’s “Hot Topic” question finds that a third of REALTORS® who responded reported an increase in the use of seller contingencies because of the low number of homes for sale.

July Pending Sales:

• Pending sales have been up 28 of the last 29 months

• Pending sales have been up 28 of the last 29 months

“As the temperatures heated up in July, buyers were hot to get their offers accepted on the limited number of homes for sale,” said 2015 MAR President Corinne Fitzgerald, broker/owner of FITZGERALD Real Estate in Greenfield. “Buyer activity should stay strong as demand exceeds supply and interest rates remain low.”

• The RMCI was up for the fourth straight month
• The RPCI has been up three of the last four months
• July is the eighth time the RPCI has been at 70 or above since August 2014
• 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

“Buyers still want to buy homes in Massachusetts despite the low number of homes available. It’s this demand that has increased REALTOR® confidence this month,” said Fitzgerald.

Monthly ‘Hot Topic’ Question:
The July “Hot Topic” question asked REALTORS® whether their clients have been using or agreeing to an influx of seller contingencies (i.e. home purchase contingency) because of the low inventory?

Of those REALTORS® who responded, nearly half (49%) responded that seller contingencies were being used no more or less frequently in this market. For the other 50 percent responses ran across the entire range. Thirty-three percent indicated that seller contingencies are being used much more frequently (8%) or seller contingencies are being used more frequently (12%) in this market. Seventeen percent indicated that seller contingencies were being used less frequently (12%) or seller contingencies were being used much less frequently (5%).

“While it is easy for many home owners to sell in this market, it is sometimes harder for those sellers to find a place to buy. A seller offering a sales contingency is one way these sellers can make sure they don’t leave themselves without a place to live. However, not all buyers will accept sales contingencies,” said Fitzgerald.

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 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

by Eric Berman – eberman (at) marealtor (dot) com – 781-839-5507