Nationwide, 44.6% of home offers written by Redfin agents faced competition in August, the lowest bidding-war rate since the beginning of the pandemic when the housing market nearly ground to a halt, according to a new report from Redfin. It’s down from 63.5% a year earlier and a revised rate of 47.2% in July; it marks the seventh-straight monthly decline.
The typical home in a bidding war received 3.2 offers in August, compared with 3.5 one month earlier and 5 one year earlier, according to data submitted by Redfin agents nationwide. The bidding-war rate is falling as the housing market cools and buyers back off from the pandemic-driven homebuying frenzy in 2021 and early 2022, with the number of home sales down nearly 20% year over year.
Buyers are dropping out of the market and competition is dwindling largely because mortgage rates have doubled from a year ago, reaching 6% in mid-September. The increase in rates makes buying a home much more expensive: A buyer purchasing a $400,000 home has a monthly mortgage payment of roughly $2,500 with today’s 6% mortgage rate, up from under $2,000 with last year’s 3% rates.
Just over one in five (21.7%) of home offers submitted by Redfin agents in San Antonio, Texas faced competition in August, the lowest share of the 36 metros in this analysis.
Tampa, Fla. had the second-lowest bidding-war rate, with 23.8% of offers facing competition, followed by Olympia, Wash. (24.2%); Phoenix, Ariz. (26.4%); and Minneapolis, Minn. (27%). Tampa, Olympia (part of the greater Seattle metro) and Phoenix are all among the 20 U.S. housing markets cooling fastest this year after attracting scores of homebuyers during the pandemic.
To be included in this analysis, metros must have had a monthly average of at least 50 offers submitted by Redfin agents from March 2021 to March 2022. Scroll down to the bottom of this report to see a table with data on all 36 metros.
Philadelphia, where 61.7% of offers faced competition, had the highest bidding-war rate. It’s followed by San Jose, Calif. (58%); Providence, R.I. (54.5%); Boston, Mass. (54%); and Detroit, Mich. (52.9%).
The bidding-war rate has declined most in Raleigh, N.C., where 35.4% of home offers faced competition in August, down from 78.9% a year earlier. It’s followed by San Antonio, Texas where 59.8% of offers faced competition last year.
The other five metros where competition has dropped most are Charlotte, N.C. (31.4%, down from 68.8%); Olympia, Wash. (24.2%, down from 60.7%); and Colorado Springs, Colo. (29.7%, down from 62.5%).
The bidding-war rate declined in all 36 metros in this analysis except Philadelphia, the metro with the highest rate. The rate there is up from 60.2% a year ago.
Offers for townhouses were more likely than other property types to encounter competition, with 44.1% of Redfin offers facing bidding wars. They were followed by single-family homes (42.1%), multi-family properties (40.2%) and condos (37%). Townhouses are popular in today’s pricey housing market because they’re typically smaller and more affordable than single-family homes.
Read the full report here.
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