In September, housing demand climbed 5.1%, according to new data from Redfin’s monthly Housing Demand Index.
This September, housing demand rose to 131 points from 125.2 in August, after remaining relatively flat around 124 since May. The Demand Index is seasonally adjusted with 100 representing the baseline level of homebuyer demand posted in January 2014.
According to Redfin’s analysis, the month-over-month increase was driven by more growth in early-stage homebuying activity than in the more serious stage of offer-writing. However, housing demand remains double digits below last year's level of 140.8 points.
Notably, the amount of people requesting home tours increased 11.2% month-over-month, which is the largest monthly increase in 16 months. Furthermore, writing offers increased by 8.1%.
Redfin explains the increase in buyer activity from August to September, is attributed to rising mortgage rates and inventory levels.
The most recent Freddie Mac Primary Mortgage Market Survey revealed mortgage rates rose slightly last week. The 30-year fixed-rate mortgage averaged 4.86%, increasing only incrementally from the week before, but remaining substantially higher than last year’s rate of 3.94%.
Freddie Mac Chief Economist Sam Khater said Freddie expects rates to continue rising, which will put downward pressure on homebuying activity.
“While higher borrowing costs will keep some people out of the market, buyers with more flexibility could take advantage of the decreased competition,” Khater said.
However, Redfin Agent Alec Traub said buyers aren’t as eager to make offers this year.
“Buyers hear that the market has slowed and are curious to see what’s available, but in general I find that today’s buyers don’t have the same strong sense of urgency to make offers that they had this time last year,” Traub said. “Buyers tell me they like a home, but they don’t love it. Last year, buyers would jump to offer on a home they only liked, but now they are waiting to fall in love.”
NOTE: Redfin’s report is based on its customers that request home tours and writing offers in 15 major metro areas in the U.S.