Competition among homebuyers is easing in nearly every market across the country, according to new data from Redfin, which shows that only 11.2% of purchase offers made on its site faced a bidding war in July.
This is down significantly from last year’s rate of 45%, highlighting a continual easing of competition.
“Mortgage rates have been mostly flat for the last month, and so has homebuyer competition, which was beginning a fast descent this time last year as mortgage rates were inching toward 5%,” Redfin Chief Economist Daryl Fairweather said. “On a local level, it’s noteworthy that some of 2018’s fiercely competitive markets – San Jose, Seattle, Los Angeles – have seen their bidding war rates plummet the most year over year. Home prices in these expensive markets have also been falling annually.”
Redfin notes that San Francisco, which was home to the nation’s most competitive housing market, also experienced significant cooling in July.
In this typically competitive market, only 35% of homebuyers successfully purchased the first home they made an offer on. While this rate is up from last month’s 28%, it still sits well below last year’s rate of 72.4%.
“Although the market isn’t as hot as it was last year, this spring and summer have been busy in San Francisco. That’s partly because homebuyers are feeling pressure to move quickly due to the high-profile tech IPOs, whether that pressure is real or perceived,” Redfin agent Miriam Westberg said. “Low interest rates are also a factor in increased homebuyer interest since the beginning of the year. The market has definitely picked up since the winter and it seems like prices and competition are slowly heading back to mid-2018 levels.”
Westberg may be right as San Francisco’s July rate now sits 7 percentage points higher than June. And this moderate month-over-month increase may indicate why Fairweather believes the market still has the potential to heat up in the months to come, potentially spurred on by falling mortgage rates.
“Overall, I expect homebuyer demand to strengthen in the second half of the year as the housing market continues to stabilize," Fairwearther said, "but we may not see a big pop in bidding wars until early next year.”
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.