As August Inventory Sinks, Demand Remains Strong

Late-summer housing market trends point to an "unusual twist" in sales activity for the fall, national brokerage Redfin said Wednesday in its latest Real-Time Housing Market Tracker.

Examining August activity in more than 30 markets nationwide, the company reported a 1.4 percent month-over-month dip in home sale prices to a median $281,000, reflecting a gain of just 5.1 percent over last year. Meanwhile, home sales weakened to 134,143, down 5.1 percent from July and 8.3 percent from August 2013.

More interesting, Redfin said, was the shift in supply and demand dynamics: Even as new listings plunged 9.3 percent—nearly triple the average July-to-August decline—numbers of customers touring homes and making offers rose, demonstrating buyers aren't backing off.

At the same time, fewer homes are being sold above their list price (2 percent less than July and 7 percent less than a year ago), meaning that same group of buyers is willing to take a slow approach in a market where high demand would normally drive up prices.

"Our take is that the seemingly incongruous August numbers reflect the mindsets of buyers and sellers," said Redfin Chief Economist Nela Richardson. "Buyers want to buy, but they're patient, and more careful not to overpay. At the same time, sellers are adjusting to having less power, which seems to have put a damper on some listing their homes."

With the groundwork of strong demand and short supply in place, Richardson said the company expects a fall selling season marked by slower price growth and stronger sales than last year.

"A surprising drop in newly listed homes combined with strong homebuyer demand could suggest that home prices will spike upward this fall as they did much of last year. Not so," she said. "We actually expect prices to continue to soften in the next few months as investors and all-cash buyers continue to retreat from the market."