Home bidding wars have fallen to their lowest level in more than two years, another sign of the cooling housing market, according to an industry report.
Nationwide, brokers Redfin faced competing bids in just 44.3 percent of their bids in July, up from 63.8 percent a year ago, the company reported Friday.
It was the sixth consecutive month of falling competition rates and the lowest percentage on record, barring April 2020 when the COVID-19 pandemic froze the national housing market.
Rising mortgage rates and house prices remaining at record highs have increasingly pushed potential homebuyers out of the market – a shift that is giving buyers more bargaining power but has sellers fearing a looming price drop.
Nationwide, Redfin brokerage agents faced competing bids on just 44.3 percent of their bids in July, up from 63.8 percent a year ago and the lowest percentage since April 2020
Phoenix had the lowest rate of bidding wars in July, while Raleigh’s housing market remains hot with the most competing offers
“The market is very different than it was a few months ago. Buyers compete with 1-2 other offers instead of 4-8. Some don’t compete at all,” said Alexis Malin, a Redfin real estate agent representing buyers in Jacksonville, Fla.
“There’s not the same sense of urgency. Apartment hunters plan tours four days in advance instead of one, and they’re becoming a lot more selective,” he added.
“If a household doesn’t tick all the boxes, they wait until they find one that does. Six months ago buyers took every house they could get.’
The Redfin report found that Phoenix, Seattle and Austin, Texas had the least competition from homebuyers last month.
In Phoenix, only 26.6 percent of bids had competing bids, followed by Riverside, California (31 percent), Seattle (31.5 percent), Austin (31.7 percent), and Nashville (33.3 percent).
Rising mortgage rates continue to put pressure on the housing market by increasing costs for buyers.
Average US long-term mortgage rates rose this week in a persistently volatile market, as the benchmark 30-year lending rate climbed back above 5 percent.
Mortgage buyer Freddie Mac reports that the 30-year rate rose to 5.22 percent from 4.99 percent last week. In contrast, the rate a year ago was 2.87 percent.
Average US long-term mortgage rates soared this week as the benchmark 30-year lending rate climbed back above 5 percent
The national average home price rose 13.4 percent year over year in June to $416,000, an all-time high
The average interest rate on 15-year fixed-rate mortgages, popular with those looking to refinance their home, rose to 4.59 percent from 4.26 percent.
Last week, the 30-year interest rate fell below 5 percent for the first time in four months, days after the Federal Reserve raised interest rates by a hefty three-quarters point to tame record-high inflation.
It was the second such hike by the central bank in less than two months.
Experts believe some stability is returning to the housing market as the contraction in demand from homebuyers eases, although supply remains fairly tight.
“Although interest rates continue to fluctuate, the latest data suggests the housing market is stabilizing as it transitions from the surge in activity during the pandemic to a more balanced market,” said Sam Khater, Freddie Mac’s chief economist.
“The implication is that house prices are likely to continue to rise for the remainder of the summer, albeit at a slower pace.”
Consumer prices rose 8.5 percent yoy in July, compared with a 9.1 percent yoy rise in June, the government reported on Wednesday.
Experts expect the housing market to regain some stability as homebuyer demand weakens, although supply remains fairly tight
Falling prices for gas, airline tickets and clothing gave consumers some relief last month, although headline inflation is still near its highest level in four decades.
Rapid rate hikes could push the US economy into recession, but it’s the Fed’s most powerful tool to bring rate hikes back to its annual inflation target of 2 percent.
Higher lending rates have deterred home seekers and cooled a housing market that had been hot for years.
The National Association of Realtors reported last month that sales of previously occupied US homes fell for the fifth straight month in June.
Home prices have continued to rise — albeit at a slower pace than earlier this year — even as sales slowed.
The national average home price rose 13.4 percent year over year in June to $416,000. According to NAR, that’s an all-time high based on 1999 data.