Rising prices are starting to keep potential purchasers from looking for homes and making an offer although interest remains near record levels, according to the Redfin Housing Demand Index.
The index dropped 5% to 124 in July from its all-time high of 130 in June. In July 2016, the index was 99.
"Buyer demand has been stronger so far in 2017 than last year, but the combination of low inventory and rising home prices is taking its toll heading into the fall," said Redfin Chief Economist Nela Richardson in a press release. "Sellers are still in control of the market, but their advantage is narrowing as buyers are becoming less willing or able to chase escalating prices."
The index is based on the number of Redfin customers in 15 markets that request a home tour and make an offer on a property, with a value of 100 representing the historical average for the period between January 2013 and December 2015.
The seasonally adjusted number of buyers requesting home tours fell 3.3% in July to 142 when compared with June, while the number of those who wrote offers dropped 11% to 77.
Compared to last year, 35.3% more buyers requested tours and 21% more wrote offers.
Baltimore had the highest demand index among the 15 metro areas tracked, at 216, up from 171 in June. Next was Seattle at 185, compared with 167 one month ago, followed by Denver at 162, down from 169.
At the other end of the scale, San Francisco had the lowest demand index at 92, down from 112 in June. Boston's index fell to 96 from 149 in June, while Austin, Texas had an index of 97, up from 67 in June.