The cooling housing market is offering some much needed relief to frustrated homebuyers.
In June, 49.9% of offers written by Redfin agents faced competition on a seasonally-adjusted basis, down from 57.3% in May and 65% a year ago, according to a new report from the brokerage. This was the fifth consecutive month of declines in the bidding war rate. In addition, this is the first time the bidding war rate has been below 50% and the lowest share of offers since May 2020.
An offer is considered part of a bidding war if it received at least one competing bid.
“While the market is cooling, it’s not coming to a crashing halt,” Shoshana Godwin, a Seattle-based Redfin agent, said in a statement. “House hunters who can still afford to buy should consider taking advantage of the slowdown given that there’s way less competition.”
Experts attribute the drop in homebuyer competition to rising mortgage rates, higher home prices, and inflation, all of which are cutting into homebuyers’ budgets. According to Redfin, the typical monthly mortgage payment is now $2,387 at the current mortgage rate of 5.51%, an increase of 44% compared to a year ago. Additionally, roughly 60,000 home purchase agreements, or 14.9% of homes under contract, fell through in June.
The bidding war rate decreased the most year over year in Riverside, California, dropping from 70.5% in June 2021 to 31.9% in June 2022. Raleigh, North Carolina followed, with a drop from 74.1% to 38.9%. Charlotte, North Carolina, which saw a drop to 31.9 percentage points to 48.1%; and Seattle, which fell 30.2 percentage points to 41.4%, also saw fewer bidding wars.
“Showings have dramatically decreased. Homes that would’ve had 20 showings two months ago are now getting one or even none,” Jenny Dedrick, a Minneapolis-based Redfin agent, said in a statement. “I had one seller take his home off the market because it only got one showing. He decided to rent it out instead. He’s moving to Mexico and thought, ‘why not let it sit and keep appreciating?’”
Homebuyer competition increased year over year in just two of the 36 metro areas analyzed: Colorado Springs, which saw a 10 percentage point increase to 55.9%, and Providence, Rhode Island, which recorded a 0.05 percentage point increase to 77.6%.
Providence also had the highest share of bidding wars in the analysis, followed by Boston (71.7%), Philadelphia (65.7%), Indianapolis (64.3%) and Worcester, Massachusetts (62.7%).
On the other end of the spectrum, Tampa, Florida had the lowest bidding war rate at 28.9%, followed by Riverside (31.9%), Phoenix (35.3%), Honolulu (38.9%) and Raleigh (38.9%).
