Home Shoppers Cool on Limited Housing Stock

Early housing demand indicators suggest buyer interest weakened in April due to a slowdown in new stock.

In its latest Real-Time Demand Pulse, national brokerage Redfin recorded a 2.1 percent month-over-month decline in customers taking home tours in April. At the same time, tours were up 15.8 percent year-over-year, indicating the demand is there—if supply can keep up.

"New listings get the attention of would-be buyers, prompting them to go on home tours," said Nela Richardson, chief economist at Redfin. "However, new listings increased just 8 percent in April, compared with 25 percent growth in March, and that slower growth had a dampening effect on home tours."

With single-family construction still subdued and the weakened economy offering few incentives for homeowners to move, Richardson expects "this absence of new supply will be keenly felt in the demand numbers and by consumers who may be frustrated looking for a home to purchase."

Further evidence of that frustration was seen in the number of signed offers, which ticked up 1.5 percent in April compared to a 5 percent increase the same time last year. As an early predictor of future home sales, the drop in offers indicates the pace of home sales heading into the summer months may increase slower than the expected surge many market-watchers had anticipated.

"Thus far there is little indication that there is going to be a huge pickup in sales in the second quarter to make up for the lethargic housing market endured in the first three months of the year," Richardson said. "Even with the polar vortex behind us, low inventory and rising prices continue to be significant headwinds to housing demand."