Four weeks ago we launched the Real-Time Demand Pulse; a monthly report on our brokerage’s touring and offer activity from thousands of home-buyers across 18 U.S. markets.
Redfin is the only major real estate broker capturing tour and offer data in one location, which enables us to project U.S. homes sales volume months in advance of completed sales, and before any other index or industry report.
With another month behind us, let’s take a look at home-buying demand in July throughout the country, and how this demand relates to home sales into August and September.
August 2012 Real-Time Demand Pulse (July data)
As the frenzied spring housing market begins to cool, Redfin’s tour and offer data suggest that while sales volume may fall off in the mid to late summer a little more quickly than last year, it will likely remain above last year’s levels for the next few months.
The Mortgage Bankers Association’s latest read on home purchase mortgage applications fell 2.1 percent in the last week of July, while the National Association of Realtors’ pending home sales index lost ground in June (the latest data available).
This is all quite predictable, as demand for homes peaks every year in May, followed by a highly predictable decline through December. The question is, how severe will the seasonal decline be this year? To understand the answer to that question, let’s dig into the data.
Redfin’s data clearly shows that early summer demand is holding up better in 2012 than it did in 2011. Offers were flat June to July this year, yet they fell 2.2% during the same time period a year earlier. Meanwhile, although offers were falling week to week at the end of July (down 1.3%), the drop was smaller than it was in 2011 (down 2.4%).
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| Redfin Customers Signing Offers | 2011 | 2012 |
|---|---|---|
| July 1-28 Compared to Four Weeks Prior | -2.2% | 0.0% |
| July 22-28 Compared to the Prior Week | -2.4% | -1.3% |
Since offer volume correlates to home sales 30-45 days in the future, we expect August sales volume will continue to show moderate increases in most markets compared to a year earlier, holding fairly steady from July. Despite this forecast of only modest increases in the overall market, Redfin expects significant growth year over year in our own business. We get a clear signal from our data on national trends from month to month, but year to year Redfin grows faster than the market.
Looking slightly further into the future, tour volume can give us an initial read of home sales in September. Redfin’s data show that although the number of Redfin customers requesting home tours hit a 2012 high in the second week of July, the month-to-month gain in tour volume was slightly softer than last year, which leads us to expect a slight decline in sales between August and September.
Overall, the July trend in touring volume has been up, but not by as much as the same time last year.
| Redfin Customers Requesting Tours | 2011 | 2012 |
|---|---|---|
| July 1-28 Compared to Four Weeks Prior | +5.6% | +3.1% |
| July 22-28 Compared to the Prior Week | +0.6% | -1.0% |
The fact that July tour requests are up, albeit modestly, bodes well for September closings. During a season when sales usually dip by as much as ten percent, we expect a drop of about five percent from August to September. Barring some sort of large national or worldwide economic jolt—such as a major sovereign default or a coordinated attack of the world’s banking centers by radiation-mutated platypuses—this year will most likely continue to show modest improvement over the last.
Sales volume in 2012 won’t be setting any world records, and you won’t see real estate agents popping champagne to celebrate a full recovery, but despite record-low inventory in most markets, it looks like sales volume will continue to come in higher than 2011 through the second half of the year.
The full Demand Pulse index data is available for download in a spreadsheet, where you can check out the trends going back almost four years.
Stay tuned next week for our Real-Time Home Price Tracker, the industry’s earliest report on what happened to real estate prices around the nation in the month of July.