Bidding wars for homes have dropped to their lowest rate in more than two years, in another sign of the cooling housing market, according to an industry report.
Nationwide, agents for brokerage Redfin faced competing offers in just 44.3 percent of their bids in July, down from 63.8 percent a year ago, according to a report from the company on Friday.
It marked the sixth straight month of decline competition rates, and the lowest share on record aside from April 2020, when the COVID-19 pandemic froze the national housing market.
Rising mortgage rates and home prices that remain at record highs have increasingly pushed prospective homebuyers out of the market – a shift that is giving buyers more power in negotiations, but making sellers fear a looming collapse in prices.
Nationwide, agents for brokerage Redfin faced competing offers in just 44.3 percent of their bids in July, down from 63.8 percent a year ago and the lowest share since April 2020
Phoenix had the lowest rate of bidding wars in July, while Raleigh’s housing market remains hot, with the most competing bids
‘The market is wildly different than it was a few months ago. Buyers are competing with one to two other offers instead of four to eight. Some aren’t facing competition at all,’ said Alexis Malin, a Redfin real estate agent representing buyers in Jacksonville, Florida.
‘There’s not the same sense of urgency. House hunters are scheduling tours four days in advance instead of one, and they’re becoming much more selective,’ he added.
‘If a home doesn’t check all of their boxes, they’re waiting until they find one that does. Six months ago, buyers were taking any house they could get.’
The Redfin report found that Phoenix, Seattle and Austin, Texas had the lowest level of homebuyer competition last month.
In Phoenix, just 26.6 percent of bids had competing offers, followed by Riverside, California (31 percent), Seattle (31.5 percent), Austin (31.7 percent) and Nashville (33.3 percent).
It comes as rising mortgage rates continue to put pressure on the housing market by raising the costs for buyers.
Average long-term U.S. mortgage rates soared this week in a continued volatile market as the key 30-year loan rate jumped back over 5 percent.
Mortgage buyer Freddie Mac reports that the 30-year rate rose to 5.22 percent from 4.99 percent last week. By contrast, the rate stood at 2.87 percent a year ago.
Average long-term U.S. mortgage rates soared this week as the key 30-year loan rate jumped back over 5 percent
The national median home price jumped 13.4 percent in June from a year earlier to $416,000, an all-time high
The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, increased to 4.59 percent from 4.26 percent.
Last week the 30-year rate fell below 5 percent for the first time in four months, days after the Federal Reserve raised its benchmark interest rate by a hefty three-quarters of a point in its most aggressive drive in over three decades to tame record-high inflation.
It was the central bank´s second such increase in less than two months.
Experts see some stability returning to the housing market as the drop in homebuyer demand moderates although supply remains fairly tight.
‘Although rates continue to fluctuate, recent data suggest that the housing market is stabilizing as it transitions from the surge of activity during the pandemic to a more balanced market,’ Freddie Mac chief economist Sam Khater said.
‘The consequence is that house prices likely will continue to rise, but at a slower pace, for the rest of the summer.’
Consumer prices jumped 8.5 percent in July compared with a year earlier, down from a 9.1 percent year-over-year increase in June, the government reported Wednesday.
Experts see some stability returning to the housing market as the drop in homebuyer demand moderates, although supply remains fairly tight
Falling prices for gas, airline tickets and clothes gave consumers a bit of relief last month, though overall inflation is still running at close to its highest level in four decades.
Rapidly hiking interest rates risks pushing the U.S. economy into a recession, but it is the Fed´s most powerful tool to get price increases back to its 2 percent annual inflation target.
Higher borrowing rates have discouraged house hunters and cooled a housing market that´s been hot for years.
The National Association of Realtors reported last month that sales of previously occupied U.S. homes slowed for the fifth consecutive month in June.
Home prices have kept climbing – albeit at a slower pace than earlier this year — even as sales slowed.
The national median home price jumped 13.4 percent in June from a year earlier to $416,000. That’s an all-time high according to data going back to 1999, NAR said.