Housing demand throughout the United States plummeted 9.6 percent in June year-on-year, which is the largest plunge since April 2016.
Data from Redfin's monthly index shows the number of Americans requesting home tours fell 6.1 percent annually in June. Based in Seattle, Washington, Redfin is a popular real estate brokerage that helps people buy and sell homes. Its sought-after index is seasonally adjusted and covers 15 large metropolitan housing markets.
Redfin data revealed an overall drop in supply while noting a large increase in listings in some of the most supply-starved markets. These markets are witnessing sky-high home prices, which continue to rise. These markets include Seattle and Washington, D.C., both of which experienced double-digit increases in the number of homes for sale in June. Demand in both those markets fell, however.
Redfin said buyer sentiment is being negatively affected by surging home prices; spiraling mortgage interest rates and very few entry-level listings. It said the strong U.S. economy and growing employment is mitigating these factors. Unfortunately for home buyers, a market stalemate has developed as rates and prices continue to rise, further weakening affordability.
The expected result of these bleak factors is the number of people requesting home tours fell 6.1 percent annually in June, said Redfin. There were 15 percent fewer offers made on homes, as well Redfin's major market index shows the total number of homes for sale was 3.8 percent lower year-on-year and there were 1.6 percent fewer new listings in June.
"As much-needed large inventory increases finally arrive in some of the hottest markets, buyers are taking the opportunity to be choosy, offering only on well-priced homes," said Pete Ziemkiewicz, head of analytics at Redfin. "Buyers in Seattle are even keeping offer contingencies like the inspection intact, something that has been increasingly rare in recent years. With more homes to go around, buyers don't need to bid as aggressively to win bidding wars. So prices, while still growing, are growing at a lower rate, and home sales are slowing."
The situation is especially grim in Southern California. Sales of both new and existing houses and condominiums dropped 11.8 percent year-on-year with prices zooming upwards to record highs, according to CoreLogic. Southern California home sales fell to the lowest reading for the month in four years.
The median price paid for all Southern California homes sold in June was a record $536,250, a 7.3 percent increase compared to June 2017. In the past, California, which is one of the largest housing markets in the U.S., has been a bellwether for the rest of the country.
