SEATTLE--(BUSINESS WIRE)--Redfin, the next-generation real estate brokerage, today announced that U.S. homebuyer demand, an early indicator of housing-market performance, was up 13 percent year over year in June. This is according to the Redfin Housing Demand Index, which debuted today at a level of 113, with a baseline of 100 starting in January 2013. Although June demand is up compared to last year, it’s a smaller increase than in previous months.
In 2015, the Demand Index followed a similar seasonal pattern to previous years, increasing from January to April, then beginning to decline. However, this year’s 6.7 percent decline from May to June is steeper than the 3.9 percent decrease for the same period in 2014. The Demand Index is based on millions of visits to Redfin.com home listing pages, and thousands of Redfin customers requesting home tours and writing offers in 15 major metro areas1.
Price and sales forecast
Redfin uses its demand data through mid-July and industry housing data from 15 major-metro areas1 to forecast changes in year-over-year home-prices and sales in the current month and one month ahead. Redfin forecasts that year over year, home prices will be up about 4.3 percent in July, and just 2.2 percent in August. Redfin expects the number of homes sold in July to grow by 14.3 percent year over year, and by 4.6 percent in August.
According to Redfin, this year’s seasonal slowdown is more extreme than normal due to buyer fatigue over high prices and low selection, combined with gradually increasing mortgage interest rates. Buyers are still in the market, but they’re setting boundaries on what they’re willing to pay.
"Homebuyers in D.C. have reached their limit when it comes to price," said Dan Galloway, a Redfin agent in Washington, D.C. "As recently as May, offers $100,000 above list price were common, but home prices are now reaching a line that buyers will not cross."
Two major factors driving the forecasts are fewer people making offers and lower list prices for homes going under contract.
“Homebuyers are still touring in force, but they’re more price sensitive,” said Nela Richardson, Redfin chief economist. “Fewer are making offers, and when they do, they’re buying less expensive homes. The median list price of pending homes fell by $10,000 to $300,000 in just the last two weeks.”
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Forecasts (Year-Over-Year Change) |
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Month |
Median Sale Price |
Home Sales |
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|
July |
+4.3% | +14.3% | ||
|
August |
+2.2% | +4.6% | ||
Redfin Forecast Models
The price model includes:
1. Visits to Redfin.com home listing pages
2. Number of Redfin
customers requesting home tours
3. Number of Redfin customers
making offers on homes
4. Median price of pending sales
5.
Median price of new listings
6. Median price per square foot of
pending sales
7. Median sale price
The sales model includes:
1. Visits to Redfin.com home listing pages
2. Number of Redfin
customers requesting home tours
3. Number of Redfin customers
making offers on homes
4. Number of homes for sale
5. Number
of homes sold
6. Number of new listings
7. Number of
properties that went under contract in the previous 30 days
About the Redfin Housing Demand Index
The Redfin Housing Demand Index is the industry’s first and only measure of housing activity prior to purchase. It is scaled to equal 100 on January 2013, which is the first month of the estimation period. The Demand Index is adjusted for Redfin’s market share growth. This homebuyer activity is used to forecast median sales prices and sales volume two months in the future, which is 30 to 60 days before final closings are tabulated and property transfers are entered into public records.
The Redfin Housing Demand Index is published on the last Tuesday of each month at 8 a.m. Eastern time. Redfin is the only major brokerage to track virtually all of its key customer events in one database.
Currently, price forecasts have a median error of 1.4 percentage points. Homes sold forecasts have a median error of 3.1 percent points. Redfin will continue to improve the accuracy of its price and sales forecast models over time. While the Demand Index currently tracks 15 top metros, Redfin serves more than 60 markets across the U.S. with its own real estate agents.
1 The Redfin Housing Demand Index covers the following 15 metro-area markets: Atlanta, GA; Austin, TX; Baltimore, MD; Boston, MA; Chicago, IL; Denver, CO; Los Angeles, CA; Oakland, CA; Orange County, CA; Phoenix, AZ; Portland, OR; San Diego, CA; San Francisco, CA; Seattle, WA; Washington, DC.
For more details and a complete methodology, click here.
About Redfin
Redfin (www.redfin.com) is a next-generation real estate brokerage that represents people buying and selling homes. Founded by technologists, Redfin employs a team of experienced, full-service real estate agents who are advocates, not salespeople, earning customer-satisfaction bonuses, not just commissions. Redfin.com features all the broker-listed homes for sale, as well as for-sale-by-owner properties that don't pay brokers a commission. Redfin also offers online tools, built by its own software engineers, that make the entire process of buying or selling a home easier and more fun. The company serves major markets across the U.S. and has closed nearly $20 billion in home sales. In 2012, Redfin was named one of The DIGITAL 100: World's Most Valuable Private Tech Companies by Business Insider.
