If something disappears from the public eye for long enough, regardless of how popular it once was, people are going to eventually stop pursuing it. No one likes a wild goose chase. According to Redfin’s Housing Demand Index, that is exactly what is happening currently with homes.
In February, the Housing Demand Index dropped 5.5 percent from a year earlier to 97. This marked the third consecutive month of year-over-year declines in demand, which can be attributed to nine straight months of year-over-year declines in inventory. Across 15 major markets, inventory fell 3 percent in February. With fewer homes available overall, fewer people viewed the listings that were available, which is a key component of the Demand Index.
The news isn’t all bad, however. While the Demand Index fell, the amount of Redfin users who requested house tours rose 19.2 percent year-over-year. Additionally, the amount of people writing offers increased 4.1 percent, up from a 6.4 percent decline in January.
While more offers are being written, a large amount of those offers, 61 percent, are facing bidding wars. These bidding wars can involve just a few other buyers, but can also include up to 25 buyers all trying to purchase the same home.
Additional good news can be found in the fact that home price growth is slowing. February experienced the median sale price of a home raise 4.1 percent, which was the lowest level of growth recorded across the 15 markets Redfin measures in the past two years. Additionally, new listings rose 10.9 percent year-over-year, suggesting the supply is beginning to grow. If this growth continues, the busy spring season will see a larger inventory of homes than has been available for buyers in quite some time. It will help even more if the focus in the growth of supply is on affordable, entry-level homes.