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Just over 60% of home offers encountered competitive bids on a seasonally adjusted basis in April, the lowest level since March 2021, says online real estate brokerage firm Redfin.
While the report only focuses on home offers written by Redfin agents, it says that their homebuying clients have been encountering fewer competitive bids over the last two months.
“The meteoric rise in mortgage rates is prompting more house hunters to back out of the housing market, causing competition to cool,” Redfin Chief Economist Daryl Fairweather said Wednesday. “Higher rates are also limiting homebuyers’ ability to significantly bid up home prices, meaning some homes aren’t selling for as much over the asking price as they would have a year ago.
“This could help set off a slowdown in home-price growth in the coming months,” she added.
In Riverside, Calif., for example, just under 43% of offers written by Redfin agents faced competition in April, down from just under 65% a year earlier.
“That 22-percentage-point decline was the largest among the 36 U.S. metropolitan areas in this analysis,” Redfin reported. Other markets that saw sizable declines in competitive bids included Atlanta, Olympia, Wash., San Diego and Raleigh, N.C., Redfin reported.
“Homes that would have received 10 offers several months ago are now getting two or three,” Elizabeth Rodriguez, a Redfin agent, said. “That’s because the jump in mortgage rates has forced a huge pool of first-time buyers to drop out.
She continued, “Sellers are still in the driver’s seat, but I expect to see the market level out over the summer, giving buyers some long-awaited room for negotiation. Homes are starting to sit for longer and sellers are starting to accept contingencies.”
Townhouses, Redfin reported, were more likely to receive competitive bids. Next came single-family homes, followed by condominiums and multi-family properties.
“Many homebuyers have sought out townhouses because they’ve been priced out of the market for single-family homes,” Redfin’s report said.