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Despite Heightened Interest, Home Offers Decline

The year started off with relatively strong homebuyer interest, but that interest has not translated into actual home purchases, according to the latest ""Real-Time Demand Pulse"":http://www.redfin.com/research/reports/real-time-demand-pulse#.Uv0VvvldVe8 released Thursday by ""Redfin"":http://www.redfin.com/, a national online real estate brokerage.

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After a normal lull during the holiday season, the number of consumers taking home tours increased 53.8 percent in the first month of the year. This monthly increase is similar to that recorded last year--a 50.9 percent increase in home tours over the month of January 2013, according to Redfin's survey.

However, the showing of Redfin customers who made offers at the start of the year is not as strong as last year. The number of offers made in January is up 28.7 percent over the month compared to an increase of 42.6 percent over the same month last year.

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Redfin takes the misalignment in the comparison between home tours this year and last and home offers this year and last to signify that ""people are still interested in buying, but fewer of them are finding homes they want to make offers on, or perhaps more importantly, that they can afford.""

Rising home prices and interest rates have taken a toll on affordability over the past year, according to Redfin. The brokerage pointed out that a $350,000 home last year with a 30-year fixed-rate loan at 3.41 percent would require a monthly payment of $1,554, whereas the same home would sell for $400,050 today with an interest rate of 4.43 percent and a monthly payment of $2,010. This represents a 29 percent increase in monthly payments for the homebuyer last year versus this year.

Another obstacle for both buyers and sellers is low inventory, which declined 9.4 percent year-over-year to its lowest level in four years as of January, according to Redfin. Low inventory provides limited options for potential buyers and discourages some potential sellers from listing their homes.

""Sellers don't want to put their home on the market until they're confident there will be something in their price range to move up to,"" said Redfin agent Paul Stone in Denver, Colorado.

""The housing market feels stuck,"" Stone said.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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