The Redfin Housing Demand Index increased 11.3 percent from April to a seasonally adjusted record level of 136 in May. This was the highest level of homebuyer demand recorded since Redfin began tracking this data in January 2013.
The Demand Index is based on thousands of Redfin customers requesting home tours and writing offers. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.
After falling from January to March, demand posted strong gains going into the peak real estate season. With the supply of homes for sale at historic lows, however, the high buyer demand is likely to continue to drive up housing prices in major metros over the next two months.
Compared to April, the seasonally adjusted number of buyers requesting tours was up 9.0 percent in May, and the seasonally adjusted number of buyers writing offers was up 15.4 percent. In a stark contrast to the surge in demand, inventory was 11.8 percent lower in May than a year earlier across the 15 metros covered by the Demand Index. May marked the 24th consecutive month of year-over-year inventory declines despite a 4.2 percent increase in the number of homes newly listed for sale. This means that people are buying up homes faster than they are being listed.
“On paper, the numbers we’ve been presenting all year make the market look like a seller’s haven,” said Redfin chief economist Nela Richardson. “But very often sellers are buyers too. Sellers in hot markets can quickly generate several competing offers, but what they really need to be on their way to their next home purchase is a committed buyer who will make it to the closing table without delays or hassles. To provide this assurance, savvy buyers aren’t just offering the highest price; they are using creative strategies like pre-inspections and non-refundable deposits to demonstrate to sellers their commitment to close the deal.”
Metro-Level Demand Highlights
Below, we provide a slideshow of local charts for each of the metros tracked by the Redfin Housing Demand Index and highlight noteworthy trends in select markets. If you’d like to learn more about a particular market, please email firstname.lastname@example.org.
Washington, D.C. Posted the Highest Demand Relative to its 2013-2015 Baseline
The nation’s capital posted a Demand Index level of 172 in May. This means that last month saw an unusually high number of buyers touring homes and making offers compared with the baseline set for the market from 2013 through 2015. The number of local buyers requesting home tours was up 87.9 percent from last year and 40 percent more people were making offers.
California Has Some of the Lowest Demand Relative to Local Baselines
While many of the metros tracked by the Demand Index posted homebuyer activity levels well above their three-year averages, Los Angeles (106), San Francisco (108) and Oakland (105) looked relatively calm in May. These metros are also among the nation’s most expensive. High prices tamp down demand and keep many buyers out of the market.