Homebuyer demand picked back up in July after posting month-over-month declines in May and June. The Redfin Housing Demand Index, based on thousands of Redfin customers requesting home tours and writing offers, increased 5.7 percent from June to a seasonally adjusted level of 94 in July. The jump in overall demand was driven by an increase in the number of Redfin customers requesting home tours, up 14.3 percent from June. Yet with no real pickup in inventory from last month (up 0.3%), increased tour demand did not translate into more offers. The number of Redfin customers writing home-purchase offers fell 1.8 percent from June to July.
Homebuyer demand continues to fall short of last year’s above-average (greater than 100) levels. The Demand Index fell 13.8 percent in July, the sixth-consecutive month of year-over-year declines in early-stage homebuyer activity. The number of Redfin customers requesting tours in July was up 15.7 percent year over year, nearly double the 8.4 percent growth recorded in June. The number of people writing home-purchase offers was essentially flat, up just 0.5 percent year over year in July.
A worsening shortage in the number of homes for sale continues to cinch homebuyer demand. July marked the 14th consecutive month of year-over-year declines in inventory across the 15 markets tracked by the Redfin Housing Demand Index, with a 7.7 percent drop in supply. When comparing this July to last July, it’s also worth noting that the calendar was laid out differently this year, with more weekend days and fewer business days than last year. While that contributed to the large year-over-year decline in sales last month, it meant there was more prime weekend time for touring homes.
“Buyers continue to be persistent when it comes to giving homes a shot, checking out what’s coming on the market despite new inventory being few and far between,” said Redfin chief economist Nela Richardson. “But strong tour growth isn’t translating into offer growth, so we’ll likely see a second lackluster month for sales in August.”
Eight markets posted month-over-month decreases in demand. Boston posted the biggest monthly decrease, with the local Demand Index down 29.8 percent in July. The largest month-over-month increase was seen in San Diego, up 30.1 percent. Demand fell from last year in 11 metro areas. The biggest year-over-year decrease in demand was seen in Oakland, where the Demand Index fell 57.6 percent. San Francisco saw the biggest annual increase in demand, up 54.8 percent in July.
“Demand in Baltimore has been surprisingly high for this time of year. The above-average Demand Index definitely matches how busy Redfin agents are feeling assisting our customers with home tours and writing offers. Given the late start to the year, I do expect the fall market to be normal to strong. Much depends on consumer confidence after the elections.”
-Bryan Waters, Redfin real estate agent in Baltimore
“The number of homes for sale is very low, likely dampening the amount of possible demand among homebuyers. And it’s true that as a listing agent, I have had far fewer consultations with potential new sellers compared to this time last year. That said, when one of my listings does hit the market, it still gets multiple offers and more than 25 guests at the first open house. In Boston, lack of demand is relative.”
-Eileen Lorway, Redfin real estate agent in boston
“While I did see some slowing in demand this July, it has picked right back up in August and I expect the trend to continue into September. Many sellers put their homes on the market right after school starts, because there’s another rush of buyers who are intentionally starting their search after the traffic and competition of the spring and summer. That drives interest, though for certain areas and price points, we’re seeing multiple offers almost year round. For example, condos in Lakeview, Lincoln Park and the West Loop priced in the $400,000s and $500,000s are always hot, since they appeal to move-up buyers who want more space in those neighborhoods.”
-Marcus Rolle, Redfin real estate agent in Chicago
“It seems the buyers who are in the market this time of year are serious, but there are somewhat fewer of them than in the spring, which means a bit less competition. For example, I recently helped three clients write offers: none of them faced competing offers and all got accepted. Over the past few years in Denver, any home that didn’t garner multiple offers was a rarity. I tell my clients that autumn is a great time to look for a home. There are about as many homes on the market, but far fewer shoppers. That said, for buyers looking at lower price points, say in the mid $200,000s, a bidding war is still the norm.”
-Julie Abeyta, Redfin real estate agent in Denver
“Although L.A. real estate always seems to be in high demand, there was a noticable shift in buyer sentiment this July. Many buyers are feeling that the market is peaking, and no one wants to be the person who buys at the top. Many sellers seem to be overly confident about the price they can get for their homes, too. When buyers who have been casually shopping for several months come across a home that is very similar to one they saw three months ago and is listed for $100,000 more, they balk at the price and either won’t make an offer or they offer below list price.”
-Lindsay Katz, Redfin real estate agent in Los Angeles
“Demand in Oakland is substantially lower than this time last year because are discouraged, not just by high prices and heavy competition, but the additional risks they are having to take on in order to be competetive. More and more, sellers are demanding the removal of all contingencies and expecting all cash, a feat many buyers are either unwilling or unable to accomplish. The best way a financed buyer can compete in this market is to come in with a fully-underwriten loan approval, which is as close to an all-cash offer as you can get without actually being all cash.”
-Dylan Masella, Redfin real estate agent in Oakland
“Homebuyer demand was consistently strong in Orange County in the beginning of the year, but because of a lack of inventory in many of the most desirable neighborhoods, some homebuyers are getting fatigued. After a really strong spring selling season we are seeing a bit of a late summer slowdown as many buyers who were highly motivated to purchase before the fall have already made their move.”
-Kim O’Hare, Redfin real estate agent in Orange County
“In Phoenix, demand varies greatly by price point. For anything that’s priced around or below $300,000, there’s a ton of demand. Those properties get multiple offers and sell quickly. Once you get into the $500,000 to $750,000 range, there’s still some competition and people may offer above list, but it’s not nearly as competitive as the more affordable portion of the market. At the million-dollar-plus price point, it’s a buyer’s market. While August was pretty busy, we are starting to see a bit of a slowdown as September approaches. That said, we’re helping a lot of buyers in the touring stage, which means things could pick up in the fall.”
-Brenda Bolin, Redfin real estate agent in Phoenix
“In Portland, homebuyer activity typically slows in August, but this year that slowdown came earlier, starting in June and lasting into August. Demand is still high because inventory is so low, but many sellers are still unwilling to accept anything below list price. Throughout the spring months, I was working with several buyers who had grown accustomed to homes selling in two days. By the time the summer rolled around, many homes were sitting for two weeks. I think a big part of it was buyer fatigue; they wanted a break. I anticipate that we’ll see a slight uptick in demand now that summer is ending and more people are getting back to business.”
-Matthew Brennan, Redfin real estate agent in Portland
“We had a slower start to the selling season this year compared to last year. Buyers were out in force last year starting in January, whereas this year the market didn’t pick up until April. The surge in demand this July seems to be the result of pent up demand in the market. After the Brexit fears subsided in June, the offers really started rolling in.”
-Jordan Clarke, Redfin real estate agent in San Diego
“Since the start of the summer, I’ve noticed that more offers are going under contract. There’s still a lot of competition, but there’s more inventory so buyers who have been in the market for a long time are now succeeding at finding homes. We even have buyers who had dropped out of the market, particularly condo buyers, who are jumping back in because they see that the market is slowing down a bit. The last two weeks of August are generally pretty quiet, especially right before school starts, but we anticipate that things will pick back up after Labor Day.”
-Winnie Lai, Redfin real estate agent in San Francisco
“We’re seeing our typical summer slowdown in Seattle, where things calm down before Labor Day hits. Demand is still a bit lower than we saw last year, but it’s important to note that in a competitive market like Seattle, multiple offers are to be expected on homes that are priced correctly. We just won’t see as many of those crazy 10 to 20-offer bidding wars as we did during the spring rush.”
-Kyle Moss, Redfin real estate agent in Seattle
“This year’s election seems to be having an even more pronounced effect on the DC area housing market than past races. There is potential for significant turnover in jobs and the people living here, so many locals aren’t in the position to make such a large commitment as purchasing a home just yet. One neighborhood to watch closely is Capitol Hill. That’s where many politicians and their staffers live, so after the election and holidays I anticipate we’ll see a major reshuffling.”
-Dan Galloway, Redfin real estate agent in Washington, D.C.
Read the full Demand Index methodology here. See Redfin’s data center for the latest updates on Demand Index.
