The Redfin Housing Demand Index decreased 8.5 percent from January’s record-high, to a seasonally adjusted level of 118 in February. Despite the dip from the previous month, this was the strongest February for homebuyer demand since at least 2013, the first year measured by the index.
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.
Compared to January, the seasonally adjusted number of buyers requesting tours was down 8.2 percent in February, while the seasonally adjusted number of buyers writing offers was down 7.7 percent.
“The only factor holding back sales this spring is supply,” said Redfin chief economist Nela Richardson. “Limited inventory, particularly for starter homes, has put a crimp in the 2017 market. We expect to see more listings hit the market this spring, but there will still not be enough inventory to match homebuyer demand.”
While lower than January’s all-time high, homebuyer demand in February remained well above levels seen around this time last year. Demand was up 20.0 percent compared to the previous February, led by a 25.7 percent year-over-year increase in homebuyers requesting tours and an 11.9 percent increase in buyers making offers.
February continued a trend of limited selection for homebuyers, who saw 7.2 percent fewer new listings hit the market, and 13.9 percent fewer homes on the market overall than in February 2016.
Metro-Level Demand Highlights
Below, we provide a slideshow of local charts for each of the metros tracked by the Redfin Demand Index and highlight noteworthy trends and agent insights from a few markets. If you’d like to learn more about a particular market, please email firstname.lastname@example.org.
Denver Buyers Out in Full Force Despite Historically Limited Selection
The Denver-area Demand Index was at 166 in February, up 100.4 percent compared to the same time last year. Demand was strong despite inventory being 30.7 percent lower than this time last year.
“The Denver metro is seeing incredibly limited selection, with the number of homes for sale down to its lowest level in over 30 years,” said Redfin real estate agent Corey Keach. “But that hasn’t stopped buyers, from whom there is as much, if not more, interest than last year. Add that up, and you have a lot of pressure on the market, with multiple offers basically an expectation, particularly for those single-family homes in price ranges below $500,000. And it’s rare for a non-cash buyer to win any home under $300,000.”
“Homes in higher price points are also seeing strong competition, and even some $1 million and $2 million dollar homes in Boulder are seeing multiple offers. Competition at that price point used to be rare here, which shows just how hot the market is.”
Redfin real estate agents also noted that the problem of limited choice of homes has been worsened by the influx of residents to the Denver area, which is experiencing strong economic growth. With very few residents leaving, the metro’s population is outpacing its housing supply.
A Hard Winter in Portland, Oregon, Slows Demand
The Portland-area Demand Index level was at 92 in February, down 32.8 percent compared to this time last year. In February, 20.7 percent fewer homebuyers were touring and 42.9 percent fewer buyers writing offers than the previous February.
“This has been the hardest winter we’ve had in years, if not decades,” said Redfin real estate agent Brian Thomas, “Not only was it the coldest winter since 1978, but we have been crippled with multiple snow and freezing rain storms that have shut down the city for as much as a week at a time. The residual effects are still being felt, as sellers are slow to come to market after the snow melts. For our more fair-weather folks, it was not a fun time to be out looking at homes.”
In February, there were 10.4 percent fewer homes for sale than at this time last year. However, more listings are on the way, said Thomas.
“Demand from prospective sellers is extremely strong at the moment, which means that by early April, once these homes hit the market, there should be enough listings to make for a very busy season. Also, we are still seeing consistent multiple offers on homes in inner Portland and much of the Vancouver area, so the buyers are there — we just need everything to defrost.”