Single Family Housing Demand Indicator
Measuring demand for the single family housing market can be challenging, but we believe looking at price reductions can provide valuable insight. If there is healthy demand for single family housing, sellers won’t necessarily need to lower their asking prices unless of course their expectations were artificially high to begin with.
On the flip side, if demand is weak, sellers will by necessity need to lower their asking prices in order to actually get a deal done. We can see this in the seasonality of the national trends for price reductions. Notice in nearly every year how price reductions ramp up heading into the Fall and drop heading into the Spring. This is clearly a reflection of the ebb and flow of the seasonality of demand for single family housing for the nation as a whole.
Inquiring Minds Want to Know
While the broader picture for the US single family housing market appears healthy and in line with recent years as we head into the spring selling season, there are pockets of weakness in some obvious spots.
Since we introduced our Homebuilder platform in the Fall, many of our customers have inquired about the health of the Houston housing market given the weakness in oil prices over the past 20 months.
In the chart below from our foundational data partner, Altos Research, the median percent of listings with a price reduction over the past 90 days is displayed by price quartile.
We can see demand for single family weakened substantially after oil prices peaked in mid-2014 as price reductions increased dramatically, especially in the top three price quartiles. The bottom price quartile has remained fairly steady and resilient.
While we have seen some increase in demand in the upper three price quartiles over the past few months, price reductions in Houston are still well above the national average, suggesting demand for single family housing in Houston is clearly weaker than it is nationally, on average, with the exception of the bottom price quartile.
At DISCERN, we're fanatical about housing data. To discover investable insights like this for yourself, learn more about DISCERN Real Estate. Just fill in your email address below to request a short demo of our cloud-based Real Estate application.
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