Home Inventory Shrinks in Sept. Prices Start Slowing Down

By Redfin, Special for  USDR

Redfin (www.redfin.com), the next-generation real estate brokerage, today announced that the Redfin Housing Demand Index increased 0.3 percent to 93 in September 2015 from 92 a year earlier, the smallest annual increase so far this  year.

“Though we think buyers have had enough of over-the-top  pricing.”

The Redfin Housing Demand Index is the industry’s first and only measure of homebuyer activity prior to purchase, and is based on millions of visits to Redfin.com home-listing pages and thousands of Redfin customers requesting tours and writing offers in 15 major metro  areas.

In September, the number of Redfin customers writing offers was up 10 percent from last year for the second month in a row. Meanwhile, growth in the number of customers requesting home tours slowed to 23 percent from 31 percent in August. That’s a change from the summer when Redfin reported that more people were touring homes but fewer were making  offers.

This change suggests that homebuyers are still out there, but they’re frustrated by a lack of choice and high prices. Although new listings are up 5.1 percent from last year, the overall inventory of homes for sale is down 2.8 percent. The typical home in October sells a week faster than it did a year  ago.

October and November  Forecasts

Redfin’s forecast model, the industry’s earliest forecast of U.S. home values and sales across 15 major metro areas, shows a 4.5 percent increase in prices year over year and a 7.3 percent rise in sales in  October.

Redfin projects that in November home prices will rise 4.3 percent and sales will advance 8.3  percent.

Looking  Ahead

The key question is how long new listings will continue to drive sales. The bear case is that the combination of woefully low inventory and high prices could take its toll on buyers and cause sales to  shrink.

The bull case is that sellers are in the best position they’ve been in years to make a move, be it trading up, downsizing or cashing out. At $12.1 trillion, U.S. home equity is at the highest level since 2006. Today’s rock bottom mortgage rates can help keep monthly payments within an affordable range for sellers who want to trade up. There’s also evidence that loans are becoming easier to come by, which could boost sales at  year-end.

“We’re bullish on sales for the remainder of 2015,” says Nela Richardson, Redfin chief economist. “Though we think buyers have had enough of over-the-top  pricing.”

September Forecast  Check-In

In September, the median sale price in the 15 metros that compose the Demand Index increased 4.8 percent from a year earlier. Redfin forecasted for 5.3 percent growth. September sales were up 10.5 percent year over year against the forecast of 10  percent.

To read the full report, complete with data, charts, insights and a full methodology, click or paste the following link:  https://www.redfin.com/research/reports/2015/sales-maintain-healthy-growth-even-as-buyers-hit-their-limits-on-price.html.

Redfin Forecast  Models

The price model  includes:

  1. Visits to Redfin.com home listing pages
  2. Number of Redfin customers requesting home tours
  3. Number of Redfin customers making offers on homes
  4. Median price of pending sales
  5. Median price of new listings
  6. Median price per square foot of pending sales
  7. Median sale price

The sales model  includes:

  1. Visits to Redfin.com home listing pages
  2. Number of Redfin customers requesting home tours
  3. Number of Redfin customers making offers on homes
  4. Number of homes for sale
  5. Number of homes sold
  6. Number of new listings
  7. Number of properties that went under contract in the previous 30 days

About the Redfin Housing Demand Index: The Redfin Housing Demand Index is the industry’s first and only measure of housing activity prior to purchase. It is scaled to equal 100 on January 2013, which is the first month of the estimation period. The Demand Index is adjusted for Redfin’s market share growth. This homebuyer activity is used to forecast median sales prices and sales volume two months in the future, which is 30 to 60 days before final closings are tabulated and property transfers are entered into public  records.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.