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Bidding wars have dropped to their lowest rate since the beginning of the coronavirus pandemic as mortgage rates continued to rise on Friday, according to a new report.
Just 44.6 percent of offers written by Redfin agents in August faced competition, the lowest rate since April 2020 and down significantly from the August 2021 rate of 63.5 percent, according to Redfin.
It also represents a significant drop-off from the beginning of the year, when Redfin found 70 percent of offers written by their agents faced competition as buyers raced to take advantage of the low-rate market while it lasted. Mortgage rates passed 6 percent in mid-September and currently hover at 6.4 percent, according to Optimal Blue data from Thursday.
Bidding wars that did take place in August were less competitive, according to data from Redfin agents, with the typical home in a bidding war receiving 3.2 offers, compared with 3.5 a month earlier and 5 one year earlier.
As buyers find themselves priced out of homeownership and home sales drop nearly 20 percent year over year, the areas that saw some of the most intense competition are now seeing the least.
San Antonio, Tampa, and Phoenix — among some of the hottest real estate markets of the past year — had the lowest number of bidding wars in August, according to Redfin.
San Antonio saw 21.7 percent of Redfin offers face competition, while Tampa — declared the hottest real estate market of 2022 by Zillow — saw 23.8 percent, Olympia saw 24.2 percent, and Phoenix saw 26.4 percent.
The city with the highest rate of bidding wars in August was Philadelphia, where 61.7 percent of offers saw competition, followed by San Jose at 58 percent and Providence at 54.5 percent. Philadelphia was the only city analyzed for the report to not register a decline in bidding war activity.
Competition saw the steepest decline in Raleigh, North Carolina, the report found. Whereas August 2021 saw 78.9 percent of offers written by Redfin agents face competition, August 2022 saw only 35.4 face competing offers.
The report also found that townhomes were the types of properties most likely to attract a bidding war, with 44.1 percent of Redfin offers on bidding wars facing competition, while condominiums were the least likely, with only 37 percent of offers facing competition.
