The Redfin Housing Demand Index remained nearly flat into the end of 2017, falling 0.6% from 128.3 in November to 127.6 in December, the brokerage said Tuesday.
The seasonally adjusted number of buyers requesting home tours fell by 3.4%, while the number making offers fell 1.8% from November.
The Demand Index is based on thousands of Redfin customers requesting home tours and writing offers. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.
“Buyer demand is still strong, but wilted a bit in the face of low inventory,” said Redfin Chief Economist Nela Richardson. “The housing market ended 2017 with 170,000 fewer listings than it had a year earlier, which means there were fewer homes for buyers to tour and make offers on. For the fourth consecutive year, inventory will be the major factor shaping the housing market in 2018.”
Though the Demand Index remained flat month over month, the year-over-year numbers reveal how home buyer activity has strengthened to a limited extent due to the supply shortage. Compared with December 2016, the Demand Index was up 8.4% and the number of buyers requesting tours was up 16.7%. Meanwhile, the number of buyers making offers slid 5.9%.
The drop in offer activity was a result of a drop in inventory, which fell 20% year-over-year in December. It was the largest inventory decline recorded since 2014, when Redfin began tracking the metric for the 15 markets included in the Demand Index. December marked the 31st consecutive month of falling supply, and the number of homes newly listed in December fell 5.6% from a year earlier. Taken together, these numbers indicate that there were plenty of people in the market to buy a home last month but there weren’t enough homes for everyone to offer on and purchase.
