The number of bidding wars in the housing market have dropped for the first time in six months as an increasing number of buyers get priced out of the market, according to a new report.
In March, 65% of Redfin agent home offers faced competition, on a seasonally adjusted basis, down from 66.7% in February, according to a new report from the real estate brokerage.
Homebuyers are still facing more competition than they did a year ago, when the bidding war rate was 62.2%, according to Redfin. However, March's figures marked the first month-over-month decline since September, which underscores the notion that demand is beginning to cool, according to the brokerage.
The issue, according to Redfin chief economist Daryl Fairweather, is that surging mortgage rates and high home prices "are prompting some Americans to back out or put their buying plans on hold."
The average 30-year fixed mortgage rate, currently at 5.11%, is the highest it's been since 2010, according to the brokerage. At the same time, home prices are up 17% compared with the same time a year ago.
Overall, "this has pushed the typical homebuyer’s monthly payment up more than 30%," according to Redfin.
Fairweather projected that bidding wars will continue to "ease further in the coming months as rising mortgage rates price more buyers out of the market."
But it will offer "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," Fairweather added.
Here are the five metros that had the lowest bidding war rates in March:
- Riverside, California: 53.9%
- Nashville, Tennessee: 57.1%
- Honolulu, Hawaii: 59%
- Indianapolis, Indiana: 59.2%
- Orlando, Florida: 60.1%
Here are the five metros that had the highest bidding war rates in March:
- San Jose, California: 79.8%
- Boston, Massachusets: 79 %
- Providence, Rhode Island: 78.3%
- Worcester, Massachusets: 78.2%
- San Diego, California: 78.1%