The Redfin Housing Demand Index fell 0.2 percent to 69 in December from a year earlier. The small drop puts homebuyer demand back in line with late 2014 levels, following a 7.1 year-over-year percent increase in November. The number of Redfin customers requesting tours rose just 19.6 percent, a marked downshift from November’s 28.8 percent increase. Growth in the number of customers writing offers fell to 3.7 percent from 7.7 percent year-over-year growth in November.
While the fact that demand slowed in December is not noteworthy, the extent to which it did is remarkable.
“The holiday season usually slows demand, however the downshift in December was sudden,” says Redfin chief economist Nela Richardson. “This was a steeper decline than we saw last year and it may feel jarring to sellers after so many months of strong buyer interest. What’s important for people to know is that demand is still there, it’s just not at the level of growth that we’re used to seeing. We need more listings for that.”
The number of new listings added in December across the 15 markets tracked by the Demand Index increased by 1.5 percent year over year, the smallest year-over-year gain in more than a year, while the total number of homes for sale fell by 6.3 percent. December marked the eighth consecutive month of year-over-year inventory declines, which contributed to the market’s relative strength and speed during the holiday season.
Home prices held onto the fall’s strong growth levels, up 6.2 percent year over year in December. Buyers who had been searching for homes since the fall, helped drive a late-season rebound in sales, up 7.7 percent year over year after two months of very low growth. A typical home stayed on the market for just 29 days in December, down from 37 days a year earlier.
But in January, which tends to set the tone for the year ahead, we aren’t yet seeing the inventory pickup needed for sales growth to continue and for home prices to stabilize at a healthy level. And Winter Storm Jonas has only begun to make its dent in demand, holding back supply even more and preventing a lot of house hunters from actively touring for the next couple of weekends.
“This is the slowest January I’ve had in years,” said Kris Paolini, a Redfin agent in Bethesda, Md. “It’s not that there aren’t plenty of buyers, but that there’s so little inventory for them to choose from, and many of the homes that are available aren’t very appealing or are overpriced. The buyers aren’t willing to make an offer on a home that’s priced significantly above market value and the sellers aren’t yet budging.”
The Demand Index tracks millions of visits to Redfin.com and the touring and purchase offers of thousands of Redfin customers in 15 major metro areas. The index equaled 100 on January 2013, the first month of the estimation period, and is adjusted for changes in Redfin market share.
Redfin Journalist Services
Phone: 206-588-6863
Email: press@redfin.com
Nela Richardson, Ph.D., Chief Economist
Phone: 206-435-7264
Email: nela.richardson@redfin.com
