Constrained by the scarcity of homes on the market, buyers across the U.S. are holding off their dreams for home ownership, resulting in a 4.3% drop in the monthly demand index by national brokerage Redfin.
The Redfin Housing Demand Index fell to 130 in June from a seasonally adjusted record level of 136 in May. Still, housing demand was up 27.8% compared to the same period last year.
The report doesn’t break down data for luxury segment, which the brokerage takes a look at in its quarterly report.
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A reading of 100 represents an average level for the three-year period from January 2013 to December 2015. Published on Tuesday, the index is based on Redfin customers requesting home tours and making offers.
Across the 15 U.S. metro areas Redfin tracks, Los Angeles had the largest increase in housing demand month-over-month. The metro-level index rose 27.1% to 134 in June. The number of customers requesting tours increased 34.9% from May while the number of buyers writing offers was up 19.4%.
Nationwide, the number of customers requesting tours fell 0.2% in June. The number of buyers writing offers decreased 11.3% from May.
Homebuyers have been hindered by housing markets with a long-standing shortage of supply. In June, there were 758,956 homes for sale, 12.2% fewer than a year ago, marking the 25th consecutive month of year-over-year declines, and the sixth consecutive month of double-digit declines in inventory, according to Redfin data.
"Faced with a low supply of homes for sale and extremely competitive conditions, many homebuyers are struggling to make it to the offer stage," Nela Richardson, chief economist at Redfin wrote in the report.
Phoenix saw the largest monthly decrease in home demand in June, with the metro-level Index falling 33.6% to 137 in June from May’s level of 205.