After a market-wide drop in housing supply put a damper on home searches in August, a pivotal turning point in September could signal increased buyer demand this fall, suggests online real estate brokerage firm Redfin.
The number of customers requesting tours with Redfin agents rose 2.2% in September compared to four weeks earlier, according to Redfin’s latest Real-Time Demand Pulse.
But although the September increase in tour requests wasn’t as strong as it had been a year ago, the late season pickup suggests that housing activity will hold steady throughout November before the seasonal slowdown in home searches over the holidays, writes Redfin Chief Economist Nela Richardson.
“After a rough start to the year, lower competition and continued low mortgage rates encouraged homebuyers to restart their search after Labor Day and boosted late-season demand,” she writes in the report released last week. “We expect that the lift in demand will carry over to next year and position the housing market for a strong start to the 2015 home-buying season.”
An uptick in customers signing offers has been another positive trend in demand this fall, with 6.8% more people signing offers with Redfin agents than four weeks ago. This percentage, however, remains well-below the 12.5% increase Redfin experienced during September 1-28 in 2013 when compared to the previous four weeks.
Nonetheless, less competition this year versus last year suggests there is a better chance potential buyers’ offer will be accepted by sellers, said Mia Simon, a Redfin agent in Palo Alto, Calif. In September, 47.4% of offers written by Redfin agents faced competition from other buyers, a decrease from 57.9% in 2013.
“In the spring, we were seeing multiple offers (typically six to 10 offers) on each home, which makes it very hard to predict a final sales price, because wildcard offers tend to be thrown in,” said Simon. “Now, there are quite a few homes that receive just one to two offers, which allows us to have a better gauge of the final sales price, and also be a little softer on terms such as an appraisal contingency.”
Even as home price growth has slowed considerably from last year, inventory is slowly starting to rebound after taking a pause in August and buyers are beginning to have much more say in pricing, Richardson told RMD in an email.
“In short, we are finally heading towards a normal balanced market,” she said. “The missing ingredient continues to be strong growth in mortgage lending. That will take a recovering housing market into a resurgent housing market.”
View Redfin’s Demand Pulse report, which includes index data going back to trends in 2010.
Written by Jason Oliva