Redfin, the Seattle-based, technology powered real estate firm, reported today (4-25-22) that 65% of home offers written by their agents faced competition on a seasonally adjusted basis in March. That is down from a revised 66.7% in February. It also marks the first month-over-month decline since September of 2021—a sign, Redfin says, that demand is cooling as soaring mortgage rates and housing prices are prompting buyers to abandon the market, at least for now.
Nevertheless, bidding wars remained more common than they were a year earlier, when 62.2% of offers encountered competition. On an unadjusted basis, March’s bidding-war rate was 69.3%, down from 71.9% in February.
Redfin also noted that the average 30-year fixed-rate mortgage is now at 5.11%—the highest level since 2010—as the Federal Reserve seeks to combat inflation. That’s up from a record low of 2.65% in January 2021. Meanwhile, home prices are up 17% year over year to a record $392,750. This has, in turn, pushed the typical homebuyer’s monthly payment up more than 30%.
In a statement prepared for today’s report release, Daryl Fairweather, Redfin’s Chief Economist, said:
“Most homebuyers are still encountering bidding wars, but competition is beginning to cool because surging mortgage rates and home prices are prompting some Americans to back out or put their buying plans on hold. We expect bidding wars to ease further in the coming months as rising mortgage rates price more buyers out of the market. That should provide some relief for people who can still afford to buy, as they’ll likely face fewer competing offers and may no longer need to offer drastically over the asking price in order to win. Unfortunately, the slowdown in competition won’t help those who have already been priced out of homeownership and are now grappling with soaring rental costs.”
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Redfin Reports Homebuyer Competition Drops for First Time in Six Months Amid Surge in Mortgage Rates, Home Prices