The Redfin Housing Demand Index, based on thousands of Redfin customers requesting home tours and writing offers, declined 3.5 percent from September to a seasonally-adjusted level of 100 in October.
A level of 100 represents the historical average for the three-year period from January 2013 to December 2015, meaning that demand in October was at recent historical norms.
In October, the number of Redfin customers requesting home tours fell 3.7 percent from September, and the number of customers writing offers on homes fell 5.9 percent. Both of these measures had posted double-digit increases in September.
One likely culprit is a shortage of homes to choose from, something that has put a damper on homebuyer enthusiasm month after month. Across the 15 metro areas tracked by the Demand Index, the number of homes listed in October was 9.5 percent lower than a year earlier. Those numbers dovetail with the shortages of homes reported in the most recent Redfin Real-Time Housing Market Tracker.
Metro-Level Demand Highlights
Limited Selection of Homes to Choose From in Denver
The Denver area in particular has had a lack of homes on the market. The number of homes for sale was down 22.3 percent compared to last year. Overall, the Redfin Demand Index in Denver was at a level of 102, down from 113 in September.
“There are still very few homes for sale in the Denver area,” said Redfin real estate agent Corey Keach. “But after a slow October, buyer interest has been picking up over the past week or two. Last year, I felt it in January, with people wanting to beat the busy spring season. My sense is that people are getting an even earlier jump this year. For homes priced below $400,000, we’re once again seeing multiple offers above the asking price. There simply aren’t enough homes to meet demand in that price range.”
Agents See Increased Activity in November in Chicago
Demand may be coming back up. In Chicago, where Redfin real estate agent Niko Voutsinas works, homebuyer demand was relatively tepid in October, with a Demand Index level of 91. He has seen activity pick up in the past couple weeks.
“Since the election, I’ve been extremely busy helping clients make offers and get under contract,” said Voutsinas. “Some people are a little bit upset about mortgage rates increasing, but most are still pushing forward. Buyers feel the rates will only continue to rise, so they might as well try to buy now, especially before the frenetic spring market.”
Demand surges in Phoenix and drops in San Diego
Phoenix posted the largest month-over-month increase in demand, up 28 percent to 105 in October.
Demand fell the most in San Diego, where the Demand Index dropped 21 percent to 87 in October.
“Following a healthy spike in demand this September, we did feel an early chill in the San Diego real estate market in October,” said Redfin real estate agent Jordan Clarke. “Overall there just seems to be lack of urgency, both among sellers and buyers. In the recent past, many buyers were driven by the fear that they would be priced out of the market if they didn’t act quickly. While prices continue to rise, the notion that they will spike dramatically has really diminished. Demand has also been tamped down by sellers who are pricing above market and taking the wait-and-see approach.”
One market that showed durability is Boston, with a Demand Index level of 140 in October, up 6.9 percent from September.
“The continued lack of homes for sale, even more acute over the past year, kept a lot of people from being successful in the bids they submitted during the ‘peak seasons’ of spring and summer,” said Redfin real estate agent James Gulden in Boston. “So we’re now seeing this overflow of demand into the fall. Many first-timers remain in the market, prepared to break their leases early if the right home comes along in the next few months. A lot of these folks also are looking now because they recognize that interest rates are still very low, but might not stay that way too much longer.”
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