In the monthly REALTORS® Confidence Index Survey (RCI), the National Association of REALTORS® asks members “In the neighborhood or area where you make most of your sales, what are your expectations for residential property prices over the next year?”
The map shows the median expected price change in the next 12 months for each state based on the April–June 2016 RCI surveys, according to theJune 2016 REALTORS®Confidence Index Survey Report.
The District of Columbia and the states of Washington, Oregon, and Colorado are the areas that are expected to have the highest price growth, with the median expected price growth at more than five to seven percent in each of these states. REALTOR®respondents from California, Idaho, Kentucky, Tennessee, South Carolina, Florida, and Hawaii also expected strong price growth, with the median expected price growth at more than four to five percent in each of these states.
Prices have been rising because supply has not kept pace with demand:
- As of June 2016, the inventory of existing homes for sale was equivalent to 4.7 months of the current monthly sales pace, which is below the six months’ supply which most analysts consider to be the level that reflects a healthy balance of demand and supply (Chart 1).
- New single-family housing construction stood at 1.15 million, 70 percent of its level in January 2000. Housing construction is in short supply across all regions (Chart 2).
- With new construction at a low level and the supply of existing homes for sale at low levels, the turnover rate of existing homes relative to the housing stock is quite low. As of the first quarter of 2016, approximately four percent of existing homes were recently sold, down from six percent in 2006 and five percent in 1999 (Chart 3). The turnover rate has improved since the rate dipped to three percent during the housing downturn in 2008 through 2011, but it still remains below the 4.5 percent rate in 1999.