Did You Know: Market Confidence as Measured by the Realtors® Confidence Index

December 16, 2009

 By Jed Smith, Managing Director, Quantitative Research

• The Realtors® Confidence Index Survey summarizes responses from approximately 1,500 Realtors® on an ongoing monthly basis concerning residential real estate market conditions.
• Every month Realtors® provide input on the market outlook for single family, townhouse, and condo sales.  Participants respond to questions regarding the current and expected demand for homes, price of homes and other economic conditions.
• The answers are then quantified and used to create the confidence index. Depending upon the response a weight of 0, 50 or 100 is assigned. A response of “strong” gets 100 points, while “moderate” is given 50 points, and “weak” (0 points). The index represents the average score for each question. The responses are then converted into a confidence index.
• The graph below summarizes Realtor® confidence as of early November 2009:

Expected Market Outlook for Single Family, Townhouse and Condo Sales

Confidence Level as Reported by Realtor® Survey

• Clearly Realtor® confidence in the home sales outlook has improved significantly towards “moderate confidence” in the outlook for the Single Family market, up from the lows experienced some months ago.
• The recovery in confidence in the sales outlook for the condo and townhouse markets is also positive but significantly less.
• We believe that the index is an indicator of how Realtors® feel about future market opportunities—a commentary about the market from the people most familiar with it on a daily basis. Clearly confidence is still under the 50 midpoint level, but the reported trends appear to indicate a recovery mode.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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