Dive Brief:
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Demand for houses rose 11.3% month-over-month in May to a seasonally adjusted index high of 136, according to Redfin’s Housing Demand Index. This report marks the highest level of homebuyer demand since January 2013, when Redfin first started tracking the data.
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The index is based on the number of requested home tours and written offers among Redfin users. The seasonally adjusted number of buyers requesting tours rose 9% in May, while the seasonally adjusted number of buyers writing offers jumped 15.4% for the month.
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That strong demand comes as inventory levels fell 11.8% year-over-year in May across 15 metros observed by the index. May represents the 24th-straight month of annual supply decreases, despite seeing a 4.2% rise in new-home listings.
Dive Insight:
Redfin's report joins others in highlighting the current seller’s market amid continued home price gains and favorable mortgage conditions. Almost three-quarters (71%) of homeowners polled by the National Association of Realtors in its Q2 Homeownership Opportunities and Market Experience survey say now is a good time to sell a home — up from 61% the year before.
Similarly, Fannie Mae’s latest May Home Purchase Sentiment Index revealed a record-high share of respondents who say now is a good time to sell. The share of those reporting that now is a good time to buy, meanwhile, reached an index low. May’s report marked the second time in the index’s 21-year history that the share of those saying the present is a good time to sell exceeded the share of those reporting it as a good time to buy.
Still, not enough sellers are listing their homes, and today's buyers are purchasing properties at a faster rate than they are coming online.
Many of those sellers are also prospective buyers. However, they have been slower to list their homes — if at all — for fear of being unable to find a suitable replacement in today's market of escalating prices. That’s created a holding pattern in the availability of existing inventory, preventing many first-time buyers from snapping up the typically smaller and older entry-level homes these owners would otherwise be leaving behind.
Single-family starts continue their overall upward trend. Building permit authorizations, which point to future growth in the sector, declined in May and were down year-over-year. Meanwhile, an index of builder sentiment kept by the National Association of Home Builders and Wells Fargo fell again in June as builders contend with a shortage of lots and labor, hampering their ability to react to demand.