Nela Richardson, Redfin's chief economist, discusses the company's latest Housing Demand Index, which posted its smallest annual increase so far this year, at .3%--going from 92 a year ago to 93 in September.
But the number of people making offers is up 10% compared to a year ago, for the second straight month. Housing supply is low, and buyers are reaching the limit of what they can spend after three years of rising values. Richardson predicts that sales will be strong in November, but price growth will be slow.
Last month we said prices would rise 5.1 percent in October and sales would increase 7.9 percent. Since then, we’ve improved our models and now expect prices to grow by 4.5 percent year over year, a slight dip from September’s rate. We project sales will rise by 7.3 percent, down from the 10 percent growth we saw in September.
Looking forward, we think as long as new listings continue to hit the market there will be buyers ready to snatch them up as long as they’re not overpriced. The key question is how long new listings growth will continue. The bear case is that slowing prices will dampen sellers desire to list their homes. The combination of woefully low inventory and high prices could take its toll on buyers and cause sales to shrink.