As the nation’s low-interest rates continue to drive purchasing demand, a report from Redfin indicates America’s bidding competition strengthened in September.
According to the company, 11% of purchasing offers made on its site faced a bidding war during the month. Although this a strong decline from last year’s rate of 41%, it’s still a slight increase from August’s eight-year low of 10%.
September’s increase, although small, highlights increased market competition, as the bidding war rate has averaged a 0.8-point drop from August to September over the past four years.
“According to seasonal patterns of homebuying competition from 2013 to 2018, the national bidding war rate falls an average of 15 percentage points from March — the month it typically peaks — to September,” Redfin writes. “This year, however, the seasonal decline has been far less pronounced, falling by just four points during the same period. Of course, this year the market just never got very competitive in the spring the way it typically does, so there wasn’t much of a spring peak from which to actually decline.”
Daryl Fairweather, Redfin’s chief economist, said September’s increase could foreshadow more competition in the months ahead.
“After the coolest spring home-selling season in at least eight years, homebuying competition didn’t have far to fall, but low mortgage rates ultimately drove a modest uptick in bidding wars in late summer when they typically become less common,” Fairweather said. “With mortgage rates likely to remain near historic lows, I expect the bidding war rate to continue to level off—rather than follow its typical end-of-year descent—as 2019 comes to a close.”
Redfin notes that the West Coast, which usually boasts the nation’s most competitive housing markets, also experienced a slight uptick in competition in September.
In San Francisco, the most competitive housing market in the nation, 28% of Redfin offers faced competition during the month. This is down from last year’s rate of 69%, but still an increase from August’s rate of 18.4%.
This was followed by Las Vegas and Phoenix, which both tied as the second-most competitive housing markets in America. In each of these metros, 21% of Redfin offers faced stiff competition in September.
Redfin Agent Kimberly Douglas said the monthly increase in competition is likely attributed to America’s home prices.
“More sellers are pricing their homes a little below the price they expect to sell at, which is encouraging bidding wars to drive up prices,” Douglas said. “In addition to teaser pricing like this, I’ve seen very aggressive price drops happening more often lately.”
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.