According to Redfin, a real estate brokerage, their Housing Demand Index increased 9.2 percent from March to a seasonally adjusted level of 121 in April. A level of 100 is based on the historical average from January 2013 to December 2015 of Redfin’s customers requesting home tours and writing offers. Though Redfin’s levels have remained above its historical average all year, the Demand Index has been steadily decreasing from January to March before picking back up in April.
In comparison to March, the seasonally adjusted number of buyers requesting tours was up 12.1 percent in April and the seasonally adjusted number of buyers writing offers was up 6.9 percent. Demand is climbing while inventory is in a state of shortage. There were 13.1 percent fewer homes for sale than the previous March across the 15 metros covered by the Demand Index. This marks the 23rd consecutive month of year-over-year inventory declines.
In the last six months, demand has moved in waves, but has been generally above the 2013-2015 average activity levels. As prices exceed their 2006 peak and inventory remains in a recent year low, experts are questioning whether this adverse environment will lead to a cooling of the market.
“We know two things heading into the summer selling season,” said Redfin Chief Economist Nela Richardson. “One, home prices continue to leap forward. Two, homebuyers continue to jump into the market. A pop of new listings only encourages more homebuyers to barge their way into this crowded and competitive, low-inventory market in order to take advantage of still-low mortgage rates. For these reasons, we expect prices to continue to grow above their three-year average for the remainder of the year.”
The third most constrained for inventory state, Seattle, follows Oakland and San Francisco, but has had the largest year-over-year decrease in inventory, down 35 percent from last April. According to Redfin, it is on track to be the metro with the least inventory. In the same time frame, the number of offers coming from Redfin customers climbed by 36.9 percent indicating that the market is more competitive this year for buyers than last year.
“There is no indication that this market is going to see a drastic increase in supply or a drop in demand, so waiting isn’t an option for a serious buyer,” said Kyle Moss, a Seattle based Redfin Agent. “Peoples intent on purchasing this season should be discerning and focus on the one or two criteria that are most important to them, like commute time and/or schools. From there, carve out a list of homes that meet your qualifications and work alongside an agent who has experience winning offers in competitive situations to build and execute a competitive strategy that fits your budget.”
For more information on the Housing Demand Index, click here.