Buyers Become More Selective and Price-Sensitive as More Homes Hit the Hottest Housing Markets
The Redfin Housing Demand Index fell 0.7 percent month over month to 120 in June. 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.
The Demand Index is based on thousands of Redfin customers requesting home tours and writing offers. The Demand Index is adjusted for Redfin’s market share growth and for seasonality. A level of 100 represents the level of homebuyer demand posted in January 2014. The underlying methodology to the Redfin Housing Demand Index was revised this month to improve the way it accounts for seasonality.
Year over year, the Demand Index posted its largest decline since April 2016. The Demand Index was 9.6 percent lower in June 2018 than it was in June 2017. The number of people requesting home tours fell 6.1 percent compared with a year earlier, and 15 percent fewer made offers on homes, the largest year-over-year decline since April 2016 for this metric as well.
In the interactive chart below, use the dropdown menu in the upper righthand corner to display and download national and metro-level data.
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. 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.
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,” said Pete Ziemkiewicz, head of analytics at Redfin. “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.”
“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 continued. “Plenty of large markets, like Chicago and Atlanta, are continuing to see increasing buyer demand and shrinking inventory.”
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.
For more detail on the Redfin Demand Index methodology, click here.