A shrinking inventory is being blamed for the stagnation in the latest Redfin Housing Demand Index
, which barely inched up from 126 in July to 127 in August. On a year-over-year basis, however, the index was up 27.7 percent.
How bad is the inventory problem? Redfin reported there were 13.9 percent fewer homes for sale in the 15 metros it analyzed last month versus the same period one year earlier, along with a 2.7 percent decline in new listings. August was the 27th consecutive month of year-over-year inventory declines in these markets. Among the 15 metro markets,, Oakland had the largest Demand Index increase, up 29 percent from July and 43 percent year-over-year, while its inventory plummeted 30 percent year-over-year and new listings were down by 5.3 percent.
“High consumer confidence and low interest rates have powered homebuyer demand, but too-low inventory has constrained home sales all year,” said Redfin Chief Economist Nela Richardson. “The Federal Reserve is now setting the stage for a slow, steady increase in mortgage rates in October by beginning to sell its mortgage portfolio. Fall buyers are likely to face slightly higher financing costs in addition to strong price growth.”