A majority of Kentucky REALTORS® expect an increase in sales volume in the next year even as house price growth expectations ease, according to the December 2021 edition of the HousingIQ Survey of Kentucky REALTORS®.
KEY POINTS
• 55% percent expect an increase in sales volume, a two-point increase from a year ago
• 27% anticipate an increase in foot traffic, a 14-point drop from a year ago
• 54% expect houses to stay on the market for longer, a 27-point increase from a year ago
• 42% expect greater price-cutting by home sellers, a 20-point increase from a year ago
“The double-digit home price appreciation of the last 18 months is discouraging buyers. On top of that, rising, albeit historically low, mortgage rates sharpen affordability challenges,” said Vidur Dhanda, author of the survey.
“Additionally, concerns about inflation and its potential impact on the overall economy is making buyers more cautious.”
In the latest issue of the Home Purchase Sentiment Index, which tabulates national consumer sentiment, Fannie Mae reported a survey record-low 26% of respondents said that it was a good time to buy a house compared to 56% a year ago.
According to the Mortage Lender Sentiment Survey, there was reduced consumer demand in the fourth quarter of 2021, and lenders expect purchase mortgage demand to remain largely stable.
In the November 2021 survey, 36% of the Kentucky REALTORS® reported that buyers were holding back because of concerns about the economy, with 82% saying that buyers were not rushing to beat mortgage rate increases.
“Wage growth and continued economic recovery will sustain housing demand,” Dhanda said.”While low inventory and weak new construction will prevent price declines.”
Based on the monthly survey data, the HousingIQ/Kentucky REALTORS® Confidence Index provides a composite measure of expectations for the Kentucky housing market over the next year.
The HousingIQ/Kentucky REALTORS® Confidence Index was mostly unchanged from last month at 45. A value of 100 corresponds to all respondents agreeing that market conditions will improve, while 50 corresponds to respondents anticipating no change in market conditions. The Price Expectation and Buyer Power sub-indices were also unchanged from last month. The Homeowner Stress sub-index continued to improve to close the month at 69. The headline index is down two points from last year, and price expectations are down three points. Compared to a year ago, buyer power has jumped 14 points, and homeowner stress has improved by 12 points.
The results point to a market where demand is softening, and lack of supply will prevent price declines. The survey results are available here.
