The long list of housing headwinds is finally taking its toll on potential buyers. Housing demand fell 9.6 percent in June, compared with June 2017, according to a monthly index from Redfin. That is the largest decline since April 2016.
Red-hot home prices, rising mortgage interest rates, very few listings at the entry level and a high rate of student loan debt have weighed on buyers for a while, but a strong economy and growing employment had mitigated those factors. Now, however, a market stalemate is developing as rates and prices continue to rise, further weakening affordability.
As a result, the number of people requesting home tours fell 6.1 percent annually in June, according to Redfin's index, which is seasonally adjusted and covers 15 large metropolitan housing markets. There were 15 percent fewer offers made on homes as well.
The supply of homes for sale increased very slightly nationally in June, according to the National Association of Realtors, but in Redfin's major market index, the total number of homes for sale was 3.8 percent lower than a year ago and there were 1.6 percent fewer new listings.