Redfin Housing Demand Index Took Big Hit in June as Supply Shortage Continues to Squeeze Buyer Activity

SEATTLE--(BUSINESS WIRE)--

Homebuyer demand fell 17 percent in June, the fifth consecutive month of year-over-year declines, according to Redfin (www.redfin.com), the next-generation real estate brokerage. The Redfin Housing Demand Index, based on thousands of Redfin customers requesting home tours and writing offers, fell 7 percent from May to a seasonally adjusted level of 88 in June.

Today Redfin unveils an improved version of its Demand Index, which tracks the earliest stages of homebuyer demand across 15 major metro areas. The Demand Index uses a new methodology that computes a seasonally adjusted value to reflect the level of homebuyer activity, so demand can be compared from one month to the next, accounting for expected seasonal changes. Redfin also introduces seasonally adjusted metro-level Demand Indices for 14 markets today.

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 reported by the National Association of Realtors two months later.

National Highlights

• Homebuyer demand fell 17% year over year and dropped 7% to 88. This represents lower-than-average demand.
• The number of Redfin customers requesting home tours grew 9.2% from last June and fell 6% from May.
• The number of Redfin customers writing offers was down by 6.6% year over year and by 5.6% month over month.

Based on demand's June decline, Redfin expects sales to slow from their current pace in August.

"These major metro areas have all felt the squeeze from inventory, meaning there was just less for buyers to look at," said Redfin chief economist Nela Richardson. "It's not surprising that demand reflects that squeeze. Even strong buyer interest can't squeeze a fresh listing from what's become a dry turnip of housing supply."

Metro-Level Highlights

• The biggest year-over-year decrease in demand was seen in Denver, where the Demand Index fell 54.7%.
• Baltimore saw the biggest annual increase in demand, up 20.7%.
• Atlanta posted the biggest monthly decrease, with the local Demand Index down 47.1%.
• San Francisco posted the biggest month-over-month gain, up 45%.

"Atlanta saw a huge dropoff in demand in June, and it's mostly because many of the properties in the ‘sweet spot' between $200,000 and $350,000 were eaten up in May," said Redfin agent Sascha Gummersbach. "The remaining inventory is priced higher, and in areas where the school ratings are lower. Anything in the ‘sweet spot' of pricing and in a highly rated school district still attracts a lot of interest."

To read the full report, complete with data, charts, insights and methodology, click or paste the following link: https://www.redfin.com/blog/2016/07/supply-shortage-continues-to-squeeze-homebuyer-demand.html.

See Redfin's data center for the latest updates on Demand Index.

Connect with Redfin

Facebook

Twitter

Instagram

Google+

LinkedIn

Blog

Download the Redfin mobile app

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the customer's favor. Founded by software engineers, Redfin has the country's #1 brokerage website and offers a host of online tools to consumers, including the most accurate home-value estimate online, the Redfin Estimate. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commission. Redfin serves more than 83 major metro areas across the U.S. The company has closed more than $31 billion in home sales, and saved customers more than $335 million in fees, and counting.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center.

To be added to Redfin's press release distribution list, subscribe here.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160726005450/en/