Redfin Cites ‘Flattening’ Housing Demand

Redfin, Seattle, said housing demand flattened between May and June, suggesting buyers have become more selective and price-sensitives as more homes hit the housing market.

The company’s monthly Housing Demand Index fell by 0.7 percent month over month to 120 in June. Redfin said the decline was driven by a 2.2 percent decrease in the seasonally adjusted number of homebuyers requesting tours and a 12.2 percent decrease in the number making offers on homes from May to June.

Year over year, the Demand Index posted its largest decline since April 2016; it was 9.6 percent lower in June than a year ago. The number of people requesting home tours fell by 6.1 percent from a year earlier; 15 percent fewer made offers on homes, the largest year-over-year decline since April 2016.

The report said across the 15 metros covered by the Demand Index, the total number of homes for sale fell by 3.8 percent and the number of homes newly listed in June fell 1.6 percent year over year. Redfin Head of Analytics Pete Ziemkiewicz said although these measures both posted declines, they reflect moderating decreases in the numbers of homes for sale, driven by large increases in some of the most supply-starved markets.

Redfin said Seattle and Washington, D.C. posted double-digit year-over-year increases in homes for sale in June. Month over month in June, homebuyer demand fell 3.4 percent and 3.7 percent in Seattle and D.C., respectively. Year over year, demand fell by 14.8 percent and by 14 percent in Seattle and D.C., respectively. Portland also experienced double-digit inventory increases, while local homebuyer demand was flat month over month. Year over year, demand in Portland increased 12.3 percent.

“As much-needed large inventory increases finally arrive in some of the hottest markets, buyers are taking the opportunity to be choosy, offering only on well-priced homes,” Ziemkiewicz said. “Buyers in Seattle are even keeping offer contingencies like the inspection intact, something that has been increasingly rare in recent years. With more homes to go around, buyers don’t need to bid as aggressively to win bidding wars, so prices, while still growing, are growing a lower rate, and home sales are slowing.”

In Chicago and Atlanta, homebuyer demand increased by 4.3 percent and 1.7 percent, respectively, month over month in June. These markets posted year-over-year inventory declines of 5.8 percent and 19.3 percent respectively.

“These cooling trends are concentrated in the markets that became the most uncomfortably hot over the past few years, so it’s too soon to tell whether this is the start of a broader cooling or simply a return to something more like balance in places that had become extreme seller’s markets,” Ziemkiewicz said. “Plenty of large markets, like Chicago and Atlanta, are continuing to see increasing buyer demand and shrinking inventory.”