Pending Home Sales Jump in November as Prices Rise Again

WALTHAM, Mass. – December 13, 2017 – (RealEstateRama) –The Massachusetts Association of Realtors® (MAR) reported today that single-family pending home sales rose over 12 percent this month from November of last year, with prices rising over four percent. Pending condominium sales were also up, rising more than two percent over last year, while prices increased slightly. Realtors® confidence in the market was up almost 20 percent in November, while confidence in prices raised only slightly over last year. This month’s “Hot Topic” question asks Realtors® how the change to the capital gains provision in the Congressional tax reform bill would impact the supply of homes in their area.

November Pending Sales:

• Pending sales up for 11 out of the last 12 months

• Pending sales up for nine out of the last 12 months

“Buyers showed us that they’re still interested in buying homes this fall, despite rising prices,” said 2017 MAR President Paul Yorkis, president of Patriot Real Estate in Medway. “We just need the inventory to meet that demand so more individuals and families can have their offers accepted.”

Realtor® Market and Price Confidence Indexes*:

• The Realtor® Market Confidence Index up for the 30^th time in 31 months
• The Realtor® Price Confidence Index up for the ninth 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

“Realtors® are especially confident in the market coming out of a very busy year,” said Yorkis. “Prices remain high, but the demand seems promising enough to carry that momentum into the winter.”

Monthly ‘Hot Topic’ Question: 

The November “Hot Topic” question asked Realtors® how the change to the capital gains provision in the Congressional tax reform bill would impact the supply of homes in their area. One of the proposals in the tax reform bill is to change the capital gains provision from requiring home sellers to live in their primary residence for five of the last eight years before they can use the capital gains exemption on the sale of their home. The current requirement is that you have to live in your primary residence for at least two of the last five years before the using the exemption.

Of those who responded, 62 percent said that the change to the capital gains provision would either somewhat reduce (39%) or significantly reduce (23%) the number of homes for sale in their market. Another 33 percent responded that the change would have no impact. A remaining six percent responded that the change proposed in the tax reform bill would either somewhat increase (5%) or significantly increase (1%) the number of homes for sale in their market.

“This is another example how this tax reform proposal could hurt the real estate market and the economy in Massachusetts,” said Yorkis. “Unfortunately, we can only hope that the conference committee will think better of this idea to penalize home owners.”

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, the 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).

*Please note. In September 2017, the survey community was refreshed to give more Realtors® the opportunity to respond.

About the Massachusetts Association of REALTORS®: 

Organized in 1924, the Massachusetts Association of Realtors® is a professional trade organization with more than 24,000 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.

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