Homebuying activity was essentially unchanged in January 2019 compared to one year ago, according to NAR’s January 2019 REALTORS® Confidence Index Survey. The REALTORS® Buyer Traffic Index registered 52 in January 2019, just slightly above 50, a level that indicates no change in the overall direction of buyer traffic activity, One year ago, the REALTORS® Buyer Traffic Index was at 69, a level that indicates homebuying traffic was broadly stronger compared to conditions one year ago. A lower index in one month compared to the level in another month slower activity during that former month, so the steep decline in the value of the index from 69 to 52 indicates homebuying conditions have slowed significantly from conditions one year ago. The REALTORS® Buyer Traffic Index has fallen below leads existing home sales by one to two months, so the January reading is an indicator of sales in the next one to two months.
Buyer traffic was broadly weaker during November and December 2018 and January 2019 compared to conditions one year ago in the District of Columbia and in states 16 states that included Oregon, California, Nebraska, Iowa, Illinois, Maryland, Connecticut, Rhode Island, and New Hampshire. However, buyer traffic conditions were broadly stronger during November and December 2018 and January 2019 compared to conditions one year ago in Idaho, Utah, Wisconsin, Indiana, Alabama, Georgia, South Carolina and North Carolina.
The REALTORS® Buyer Traffic Index has hovered at near 50 since August 2018 when the index fell to 51 and remained at below 50 through December 2018. The January reading of 52 indicates a slight upturn in homebuyer traffic as mortgage rates started falling in January 2019. As of the week of February 14, the average 30-year fixed mortgage rate fell to 4.37 percent, from a high of 4.94 in the weeks of November 8 and 15.
Higher mortgage rates compared to one year ago, the negative effect on confidence of the government shutdown, the cap on deductions for property, state, and local income taxes, and the very cold weather were some factors cited by the respondents for the slowdown in buyer activity in their markets.
Respondents from some Midwest states— Ohio, Illinois, Iowa, Michigan, Missouri, Indiana— reported that the extremely cold weather held homebuying activity.
Some respondents from California, New York, and New Jersey reported the cap on deductions for property, state and local income taxes is negatively affecting sales.
A respondent from California also noted that the widespread wildfires in 2018 are still impacting home sales.
Respondents from Alabama, California, Nevada, Florida, Texas, and Virginia reported that the government shutdown appeared to have had an impact in homebuying activity.
Lack of supply, especially of affordable homes, continues to frustrate would-be homebuyers.
REALTORS® reported that higher mortgage rates (during October, November and December) discouraged buyers
To note, mortgage rates have started falling again since January 2019. As of February 14, the 30-year fixed rate mortgage has fallen to 4.37 percent from 4.8 percent during the weeks of November 8 and 15. The 30-year fixed mortgage rate is still slightly higher compared to the 3.95 percent in January 2018. The monthly increase in mortgage payment arising from a 0.5 percent increase in mortgage rates on a loan of $250,000 is about $73 per month.
In a monthly survey of REALTORS®, NAR asks respondents “Compared to the same month (January) last year, how would you rate the past month’s traffic in neighborhood(s) or area(s) where you make most of your sales?” NAR compiles the responses into an index, where an index above 50 indicates that more respondents reported “stronger” traffic than “weaker” traffic. In generating the buyer traffic index at the state level, NAR uses data for the last three surveys to have close to 30 observations. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations. The index is not seasonally adjusted, so a year-over-year comparison is appropriate.
 The index is not seasonally adjusted, so a year-over-year comparison is appropriate compared to a month-to-month comparison in evaluating whether market conditions are improving or deteriorating.
 Freddie Mac’s survey of 30-year fixed rate mortgages
Bloomberg reported that 876,000 acres were burned in California due to wildfires, citing data form the California Department of Forestry and Fire and Protection in Now California Wildfires Burn All Year; see https://www.bloomberg.com/news/articles/2019-01-17/california-fires-burn-all-year-as-drought-left-state-a-tinderbox
 Rates started falling after Chairman Powell of the Federal Reserve Board announced in December 2018 that it was looking at one rate hike in 2019.
The REALTORS® Confidence Index (RCI) survey gathers monthly information from REALTORS® about local real estate market conditions, characteristics of buyers and sellers, and issues affecting homeownership and real estate transactions. This report presents key results about market transactions from December 2018. View and download the full report here.
Market Conditions and Expectations
The REALTORS® Buyer Traffic Index registered at 48 (66 in December 2017).
The REALTORS® Seller Traffic Index registered at 39 (47 in December 2017).
The REALTORS® Confidence Index—Six–Month Outlook Current Conditions registered at 59 for detached single-family, 48 for townhome, and 46 for condominium properties. An index above 50 indicates market conditions are expected to improve.
Properties were typically on the market for 46 days (40 days in December 2017).
Seventy-five percent of respondents reported that home prices remained constant or rose in December 2018 compared to levels one year ago (90 percent in December 2017).
Characteristics of Buyers and Sellers
First-time buyers accounted for 32 percent of sales (32 percent in December 2017).
Vacation and investment buyers comprised 13 percent of sales (16 percent in December 2017).
Sales of distressed properties (foreclosed or sold as a short sale) accounted for two percent of sales (five percent in December 2017).
Cash sales made up 22 percent of sales (20 percent in December 2017).
Twenty-two percent of sellers offered incentives such as paying for closing costs (10 percent), providing warranty (9 percent), and undertaking remodeling (3 percent).
Issues Affecting Buyers and Sellers
From October–December 2018, 75 percent of contracts settled on time (71 percent in December 2017).
Among sales that closed in December 2018, 74 percent had contract contingencies. The most common contingencies pertained to home inspection (54 percent), obtaining financing (45 percent), and getting an acceptable appraisal (42 percent).
REALTORS® report “interest rate” and “low inventory” as the major issues affecting transactions in December 2018.
About the RCI Survey
The RCI Survey gathers information from REALTORS® about local market conditions based on their client interactions and the characteristics of their most recent sales for the month.
The December 2018 survey was sent to 50,000 REALTORS® who were selected from NAR’s more than 1.3 million members through simple random sampling and to 9,600 respondents in the previous three surveys who provided their email addresses.
There were 5,886 respondents to the online survey which ran from January 2-11, 2019. The survey’s overall margin of error at the 95 percent confidence level is one percent. The margins of error for subgroups and sample proportions of below or above 50 percent are larger.
NAR weighs the responses by a factor that aligns the sample distribution of responses to the distribution of NAR membership.
The REALTORS® Confidence Index is provided by NAR solely for use as a reference. Resale of any part of this data is prohibited without NAR’s prior written consent. For questions on this report or to purchase the RCI series, please email: Data@realtors.org
 Thanks to George Ratiu, Managing Director, Housing and Commercial Research and Gay Cororaton, Research Economist for their data analysis and comments to the RCI Report.
 Respondents report on the most recent characteristics of their most recent sale for the month.
 An index greater than 50 means more respondents reported conditions as “strong” compared to one year ago than “weak.” An index of 50 indicates a balance of respondents
who viewed conditions as “strong” or “weak.”
 The difference in the sum of percentages to the total percentage of sellers who offered incentives is due to rounding.
In a monthly survey of REALTORS®, respondents are asked “Compared to the same month last year, how would you rate the past month’s traffic in neighborhood(s) or area(s) where you make most of your sales?” Respondents rate buyer traffic as “Stronger” (100), “Stable” (50), or “Weaker” (0) and the responses are compiled into a diffusion index. An index greater than 50 means that more respondents reported “stronger” than “weaker” conditions.
The chart below shows buyer traffic conditions in October–December 2017 compared to conditions one year ago, according to the December 2017 REALTORS® Confidence Index Survey. Except for four states,REALTORS® reported that buyer conditions were “stable” (unchanged) to “very strong” compared to conditions one year ago. Respondents from Texas and Florida, states which were hit by hurricanes Harvey and Irma, generally reported “strong” buying activity compared to one year ago. On the other hand, Alaska, North Dakota, Louisiana, and West Virginia respondents generally reported “weak” buyer traffic compared to one year ago, and this may be related to the effect of the slump in oil prices since 2015, though oil prices have started to firm up again in 2017 as OPEC cut its oil production.
Supply conditions in October –December 2017 is improving but supply is still tight, with only 26 states having seller traffic conditions that are “stable” (unchanged) or “strong” compared to conditions one year ago. Most of the states with stable or improving seller activity in October-December 2017 are in southern area of the United States.
Nationally, the REALTORS® Buyer Traffic Index registered at 66, while the REALTORS® Seller Traffic Index was at 47. An index above 50 indicates that more respondents reported stronger than weaker conditions compared to one year ago, so the data indicates that homebuying demand continues to outpace supply.
The REALTORS® Buyer Traffic Index as Leading Indicator of Contracts and Sales
The REALTORS® Buyer Traffic Index is a leading indicator of future contracts (pending home sales sales) and closings (existing home sales). The REALTORS® Buyer Traffic Index tends to lead pending home sales by one month and existing home sales by two months. The uptick in the November and December 2017 Buyer Traffic Index indicates a continued uptick in sales on a month-to-month basis in January and February 2018.
 In generating the indices, NAR uses data for the last three surveys to have close to 30 observations. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations.For graphical purposes, index values from25.01 to 45 are labeled “Weak,” values of 45.01 to 55 are labeled “Stable,” values of 55.01 to 75 are labeled “Strong,” and values greater than 75 are labeled “Very Strong.”