Housing Demand Unchanged for 4th Consecutive Month

Redfin, Seattle, said its Housing Demand Index has remained roughly unchanged for the past four months, inching up by just 0.3 percent from July to 125.2 in August.

Redfin also reported an increase in price drops and softening demand in previously hot markets, which Redfin Senior Economist Taylor Marr said pointed to an environment enabling homebuyers to be more choosy. The number of people requesting home tours rose 3.4 percent month over month, while the number of buyers making offers remained roughly flat.

The report noted while demand has not changed much in the last four months, it remains well below the levels Redfin reported from a year ago. The Demand Index was down 11.9 percent year over year in August, the sixth consecutive month of year-over-year decreases. The number of homebuyers requesting tours fell 3.5 percent year over year, the third consecutive month of annual declines. The number of homebuyers making offers dropped 20.2 percent year over year in August, the sharpest annual decline since March 2016.

“The housing market is past the heydays of spring and early summer, when most homes received multiple offers from buyers desperate to get a home under contract,” Marr said. “Several factors are contributing to stalling demand. Tax reform and higher home prices are causing homebuyers to be more careful about their decision-making. Meanwhile buyers on the West Coast are finding that a growing supply of homes can work in their favor, enabling them to be more selective and make less aggressive offers. While overall demand still remains strong, easing inventory pressure is allowing home buyers to be more careful in their purchases.”

Several metro areas posted month-over-month increases in the Demand Index, including San Francisco (4.4%), Chicago (3.1%) and Atlanta (1.7%). But those gains were moderated by declines in Orange County (-10.8%) and others.