As buyers reach their price limits and show less interest in homes, housing demand lowered for the fourth consecutive month. According to Redfin's Housing Demand Index, homebuyer activity fell 5 percentage points from 113 in June to 108 in July.
"Redfin real estate agents report that the market is rapidly cooling, with buyers reaching their limit on prices and showing less interest in hot home listings," the report said.
In a hot market like Denver, where half of new listings sell in six days or less, Redfin agents and their customers are witnessing the slowdown first-hand.
“It feels like the market is at a standstill,” said Michelle Ackerman, a Redfin agent. “Showings have dropped off significantly.”
In July 2013, homebuyer activity had reached 119, and 99 in July 2014, Redfin reported. Still, homebuyer demand was up 9 percent year over year in July, leading Redfin’s Forecast Model to project that in August, home prices across 15 major metro areas will rise 2.2 percent and sales to increase 2.6 percent year over year.
Redfin forecasted July home prices and sales on July 23 using demand data through mid-July and housing metrics from 15 major metro areas.
“It feels like the market is at a standstill. Showings have dropped off significantly.”
In July, the median sale price increased 4.6 percent from a year earlier, compared to Redfin’s July 23 forecast of 4.3 percent growth. The Redfin sales forecast for July was also on target, with sales up 14 percent year-over-year against the forecast of 14.3 percent.
The August forecast predicts that prices will rise 2.2 percent and sales to increase 4.6 percent compared to this time last year. In September, prices are expected to increase 5.3 percent from last year and sales to rise by 10 percent.
In comparison to the housing market in September 2014, this years' market looks very strong, Redfin says. However, Redfin still projects that demand will continue to fall into the fall months.
“The market is changing week by week, and today’s buyers are more likely to walk away from a home they feel is overpriced than last month’s buyers were,” Ackerman said. “Sellers now have to negotiate with buyers to make a sale happen.”