Dive Brief:
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Demand for homes is showing no sign of weakening despite the recent rise in mortgage rates, and it is expected to strengthen further in the early part of this year as more new listings hit the market, according to real estate listing and brokerage company Redfin.
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The Redfin Housing Demand Index rose 15.1% from November to a seasonally adjusted mark of 124 in December, up 26.3% from the year-ago period and the highest level since Redfin started the index in January 2013.
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The index is based on the volume of requested home tours and writing offers among Redfin customers, with a mark of 100 representing the average from January 2013 to January 2015. December’s figures were fueled by a 36.4% year-over-year jump in homebuyers requesting tours and a 10.2% rise in buyers making offers.
Dive Insight:
Demand levels rose at an above-average rate in all metros tracked by Redfin’s index except Portland, OR. San Francisco led the list, with its demand index surging 114.1% from a year ago to a mark of 102 in December.
Meanwhile, inventory continues to tighten. Redfin tracked a 12.6% year-over-year drop in for-sale homes in December.
The market has been dominated by a lack of inventory coming online over the past year. Zillow reported last month that for-sale inventory tumbled 5.9% in November from a year earlier, marking the 22nd-consecutive month of falling inventory levels and the lowest level by the online real estate database since January 2010, when it started tracking.
The supply shortage is a major contributor to escalating home prices, with the latest S&P Core Logic Case-Shiller U.S. National Home Price Index on track for a 5.6% annual increase in November compared to 5.5% in October.
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