Redfin: Housing Demand Index Virtually Stalled Amid Continued Inventory Shortages

October 4, 2017

Redfin, Seattle, reported the number of its customers touring and writing offers held steady from July to August, but increased year over year.

The company’s Housing Demand Index remained virtually flat, up slightly from 126 in July to 127 in August, but increased by27.7 percent year over year. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.

Across the 15 metros covered by the Demand Index, Redfin reported 13.9 percent fewer homes for sale in August than there were a year prior, with a 2.7 percent decline in new listings. August marked the 27th consecutive month of year-over-year inventory declines in these markets.

“High consumer confidence and low interest rates have powered homebuyer demand, but too-low inventory has constrained home sales all year,” said Redfin chief economist Nela Richardson. “The Federal Reserve is now setting the stage for a slow, steady increase in mortgage rates in October by beginning to sell its mortgage portfolio. Fall buyers are likely to face slightly higher financing costs in addition to strong price growth.”

Redfin said the seasonally adjusted number of buyers requesting home tours and writing offers remained flat from July to August, decreasing 0.8 percent and increasing 0.1 percent respectively. Compared to last year, 42.3 percent more buyers requested tours in August and 8.2 percent more wrote offers.

At the metro level, Oakland saw the largest Demand Index increase in August, up 29 percent from July and 43 percent year over year. Inventory was down 30 percent year over year and new listings fell 5.3 percent.

“August has traditionally been one of the slowest months in Oakland for homebuyer activity as people go on vacation and finish up their family activities before the kids head back to school,” said Redfin Oakland agent Tom Hendershot. “This year, August demand has really ramped up compared to July, and we expect September to be a very active month as long as more new inventory hits the market.”

The report is available online at https://www.redfin.com/blog/2017/09/redfin-housing-demand-index-virtually-flat-from-july-to-august-due-to-continued-inventory-shortage.html.