The demand for housing is on the rise despite headwinds like inventory shortage, increased mortgage rates, and volatile stock markets according to online brokerage firm Redfin, which released data for its Redfin Housing Demand Index on Tuesday.
The index is based on data from Redfin customers requesting home tours and writing offers, with a level of 100 representing the historical average for the three-year period from January 2013 to December 2015.
The index began the year at 130.5 up by 0.5 percent on a month-over-month basis and increased 4.8 percent when compared with January 2017. While the number of buyers requesting a tour went up 13.7 percent during the year, the number of buyers making offers slid 9.7 percent on a year-over-year basis. However, the data indicated that the number of buyers making an offer grew 1.2 percent between December 2017 and January 2018.
According to the data January offers and sales of homes were heavily restricted registering a 19.9 percent year-over-year decline in housing inventory, with January marking the thirty-second consecutive month of declining supply of homes.
“Inventory has been deteriorating for more than two years, yet 2018 started off with buyer demand stronger than in any previous January we’ve measured,” said Nela Richardson, Chief Economist at Redfin. “Along with inventory declines, buyers contended with rising mortgage rates, an overhaul of the tax code and a jumpy stock market. However, strong local labor markets helped keep buyers enthusiastic about homeownership despite headwinds.”
According to Redfin, homes in the affordable price ranges are feeling the effects of inventory shortage the most, with homes that get listed in these ranges selling within days and above the asking price.