As the nation’s home listings begin to stay on the market longer, new data from Redfin suggests purchasing competition is easing in nearly every metro across the country.
According to the company, only 12% of purchasing offers made on its site faced a bidding war in June. Not only is this a strong decline from last year’s rate of 52%, but it also highlights a significant slowdown in competition.
“With low mortgage interest rates luring more homebuyers off the sidelines as supply dwindles, we’re likely to see competition pick back up, especially for the most affordable homes and neighborhoods, where inventory is limited and buyers are most rate-sensitive,” Redfin Chief Economist Daryl Fairweather said. “At Redfin, we’ve been seeing increases in the numbers of homebuyers starting their searches and going on home tours following the latest mortgage rate drops.”
Redfin notes that the West Coast, which usually boasts the nation’s most competitive housing markets, also experienced noteworthy cooling in June.
In fact, San Francisco, last year’s most competitive market, hit the brakes as only 28% of homebuyers successfully purchased the first home they made an offer on. Although this rate contrasted last year’s 65%, the city still remained the most competitive housing market in June.
“Bidding wars are still somewhat common in San Francisco, mostly at price points around $1 million, which is relatively inexpensive for the city, but enough to buy a modest house in a number of neighborhoods,” Redfin agent Chris Jurach said. “Once you get above around $1.25 million, buyers are being more selective, leading to fewer bidding wars in those upper price ranges.”
Perhaps buyers are being more selective in San Jose as well, as the report indicates that only 6% of its offers faced competition in June. This is drastically down from last year’s rate of 74%.
“San Jose buyers have seen homes for sale staying on the market longer, and more sellers dropping prices than either of the last two years,” Redfin agent Stella Phua said. “When they see the market slowing down, they prefer to take a ‘wait and see’ approach. The only homes that are getting multiple offers now are the ones in the best locations, great condition, and priced lower than similar homes in the neighborhood.”
NOTE: Redfin’s analysis is based on home offer and purchase data gathered from thousands of Americans that bought homes with Redfin agents over the past five years.