The Redfin Housing Demand Index has remained roughly unchanged for the past four months, inching up 0.3% from July to 125.2 in August, according to Redfin.
Redfin has reported an increase in price drops and softening demand in previously hot markets, which point to an environment enabling homebuyers to be more choosy. The number of people requesting home tours rose 3.4% month over month, while the number of buyers making offers remained roughly flat.
While demand has not changed much in the last four months, it remains well below the levels Redfin reported at the same time a year ago. The Demand Index was down 11.9% year over year in August, the sixth consecutive month of year-over-year decreases. The number of home buyers requesting tours fell 3.5% year over year, the third consecutive month of annual declines. The number of home buyers making offers dropped 20.2% year over year in August, the sharpest annual decline since March 2016.
The Redfin Housing Demand Index is based on thousands of Redfin customers requesting home tours and writing offers in 15 major metro areas in the U.S. The Demand Index is adjusted for Redfin’s market share growth and for seasonality. A level of 100 represents the level of home buyer demand posted in January 2014.
“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,” said Taylor Marr, Redfin senior economist. “Several factors are contributing to stalling demand. Tax reform and higher home prices are causing home buyers 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.
