Low Inventory Hinders High Home Demand

After a record high in January, the Redfin Housing Demand Index fell 8.5 percent in February. However, despite the dip, this was the strongest February for homebuyer demand since at least 2013.

The Demand index, based on Redfin customer requests for home tours and writing offers, shows that buyers requesting tours were down 8.2 percent while buyers requesting writing offers were down 7.7 percent. Redfin blames the reduction in demand on the small inventory.

“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.”

Homebuyer demand was still up year-over-year, growing by 20 percent compared to February 2016. Some areas saw strong increases in demand, despite the smaller inventory. The Denver-area housing demand grew 100.4 percent year-over-year in February, but inventory in Denver is currently 30.7 percent lower than 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.”

Other cities haven’t been so lucky. The Portland-area demand index dropped 32.8 percent year-over-year in February. Fewer homebuyers, 20.7 percent fewer, toured homes while 42.9 percent fewer buyers requested writing offers than last year.

10.4 percent fewer homes were for sale than this time last year in Portland, and the blame could be put on an exceptionally cold winter. However, more listings should be on the way, according to Redfin Agent Brian 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.”