The housing market might be tight but for homebuyers, the drive to buy a house hasn't seemed to wane, according to the latest Redfin Housing Demand Index.
In May, Redfin found, that the demand for housing increased 7.4 percent compared to April. That brought the index number to 116. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.
The report attributed the rise to a 6.3 percent increase in the number of homebuyers requesting tours, and a 9.7 percent increase in the number of people making offers on homes from April to May.
Across the 15 metros covered by the Demand Index, this is the second-straight month new listings have increased. There were 6.6 percent more newly listed homes for sale in April compared to the same time last year, and 3.6 percent more new listings in May, compared to May 2017, the report stated.
Most of the growth in demand is happening in Western markets—the Bay Area, Southern California, Portland, and Seattle in particular. Sharp downturns in demand, however, happened in the Baltimore and Washington, D.C. markets, where demand has been on a steady drop since last November.
Also, despite the Demand Index's rebound from April, homebuyer demand was 7.5 percent lower in May 2018 than it was a year earlier.
“The same number of people were requesting home tours, but the number making offers fell 16.7 percent year over year,” the report stated. “Again, this is an indication of a dearth of homes to make offers on, as opposed to consumers’ desire to buy.”
Demand is also outstripping supply, which is why total inventory is still decreasing, the report stated. According to the index, the total number of homes for sale was down 3.3 percent year over year in May.
“People listing their homes for sale in higher numbers this April and May is good news for buyers, and good news for home sales,” said Pete Ziemkiewicz, head of analytics at Redfin. “But it’s still not enough to satisfy buyer demand, which means price increases will likely continue.”