The Redfin Housing Demand Index, based on thousands of Redfin customers requesting home tours and writing offers, increased 13.3 percent from last month to a seasonally adjusted level of 105 in September. This is the highest level of demand seen since June 2013.
Last year at this time, the Redfin Housing Demand Index was at 101. But this September, 31.8 percent more potential homebuyers toured homes than last year and 26.8 percent more made offers, indicating that there is a healthy pool of buyers willing and ready to purchase, should they find the right home.
“Buyer demand gained momentum after Labor Day when a pop of fresh listings hit the market,” said Redfin chief economist Nela Richardson. New listings are up 3.3 percent compared to last year at this time. “More than any other factor, new listings pulled buyers into the market in September. The pace of this demand will only be sustained if the supply of homes for sale continues to improve.”
While some new listings have hit the market, Redfin agents are still seeing the need for even more supply, and are advising buyers to be patient.
“It’s very busy right now, much more so than you would normally expect this time of year,” said Lamar Austin, a Redfin real estate agent in Chicago. “Despite the surge of activity, there still aren’t enough homes for sale to satisfy demand. Every time something new comes on the market, my clients are touring to see if it’s a good fit. Homes that are appealing often get bid up, while many of my clients are having to prolong the timeframe of their search, and even take month-to-month lease extensions, while they look. There are lots of new condo developments in the works, and that will help – but most of them won’t be ready until the spring.”
The Redfin Housing Demand Index, the industry’s first and only measure of homebuyer activity prior to purchase, has a benchmark of 100, representing the three-year historical average from January 2013 through December 2015. A Demand Index reading over 100 reflects high, or stronger-than-expected demand. A reading below 100 means demand is relatively weak and there is less activity than expected. The Demand Index is a forward-looking metric that is highly correlated with existing-home sales levels seen two months later as reported by the National Association of Realtors.
Of the 13 metros tracked, six had demand numbers over 100, led by Boston’s 129. Eleven of the 13 saw demand increases compared to the previous month. Among metros slightly below the 100 benchmark, all but two had Demand Index readings above 95.
