Homebuyer Demand Cools In November

In November, only 59.6% of home offers written by Redfin agents faced competition, marking the lowest level in 11 months, according to a new report from Redfin. Home offers are down from a revised rate of 61.8% in October and a pandemic peak of 74.6% in April, though up slightly from 57.3% in November of last year. 

"It's typical for competition to ease in the winter months as more families take time off for the holidays," said Redfin chief economist Daryl Fairweather. "While competition waned in November, it was still higher than a year earlier, which is a sign that demand will be strong in the new year."

The housing market remains heated due to record-low mortgage rates and an acute shortage of homes for sale, but homebuyer demand is following the typical season patterns, starting slow as the year winds down. 

Richmond, Virginia had the highest bidding-war rate of the 44 U.S. metropolitan areas in the analysis, with 80% of offers written by Redfin agents facing competition in November. Richmond was followed by Salt Lake City at 73.8% and San Diego at 72%. Honolulu, HI, and Dallas, TX, also made the top five with bidding-war rates of 71.1% and 70.6%, respectively.

"Bidding wars are still happening, but buyers are starting to get more breathing room," said Jill Thompson, a Redfin agent in Indianapolis, where the bidding-war rate dropped to 36.8% in November from 73.6% in October.

The typical home in Indianapolis was going for $15,000 to $20,000 or sometimes even $50,000 over the asking price, according to Thompson, and buyers were paying cash, waiving inspection contingencies, and overlooking necessary repairs in order to win. In the current market, buyers are more careful about overpaying and aren’t waiving inspections as freely as they were last spring, she said. There’s less of a rush to commit to a house after the first tour.