After five months on the climb, and while housing scarcity inflates, housing demand fell off by 5.3 percent in May, according to the latest Redfin Housing Demand Index. May’s index of 114 marks the sixth straight month of year-over-year declines.
“Faced with a diminishing number of homes to choose from, 4.5 percent fewer people wrote offers last month than a year earlier,” the report stated.
Meanwhile, tours by prospective buyers went way up in May, increasing 18 percent compared to a year ago, though down slightly from April’s 20 percent.
"Two of the fundamental drivers of buyer demand are better this year than last year, yet we still saw retrenchment in buyer interest retreat," said Redfin chief economist Nela Richardson. "Thirty-year mortgage rates are at three-year lows and the unemployment rate is down to 4.7 percent nationally, compared to 5.5 percent last year. However, steady job growth and low rates are no match for the drought in available homes for sale, which stifled buyer demand."
"Two of the fundamental drivers of buyer demand are better this year than last year, yet we still saw retrenchment in buyer interest retreat."
Nela Richardson, Chief Economist, Redfin
Also according to the report, sale prices are increasingly exceeding asking prices. Nearly 29 percent of homes sold for more than their asking prices, up from 26.8 percent last year and the largest portion recorded since 2013, the report found.
For houses that did sell, May “was a record breaker in terms of speed and intensity,” the report stated. Houses in May sold at their fastest pace since 2009, with the typical home on the market for only 15 days last month‒‒two days faster than last year.
The effects on some areas are actually stymieing growth in what should be healthy markets.
In Denver, for example, the typical home sold in just five days in May, the fastest pace in the country. However, Redfin reported, this swift current has created a lackluster market, due to the extreme scarcity of homes for sale.
“The root of Denver’s inventory shortage this year is that move-up buyers can’t move up because there’s nothing for them to buy,” said Redfin agent Michelle Ackerman. “They’re fearful of selling their homes and having nowhere to go.”