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Redfin's Housing Demand Index reported a 5.3% drop to 114 for the month of May 2016. Redfin staffer Rachel Musiker takes a look at demand for the housing market and some of the factors that may be responsible for this decline.

Thirty-year mortgage rates and the unemployment rate, both drivers of housing demand, were down, yet the demand for houses did not increase. While these numbers are high, the lack of homes for sale seems to to be playing a big role in the demand decline. May marked the 13th consecutive month with year-over-year inventory declines.

Redfin agent Michelle Ackerman used Denver, the nation's hottest market, to explain the inventory scarcity:

“The root of Denver’s inventory shortage this year is that move-up buyers can’t move up because there’s nothing for them to buy, and they’re fearful of selling their homes and having nowhere to go,” Ackerman said. “If we could get them into their move-up properties then we’d have more entry-level ones for sale.”

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