Bidding Wars in May and June Driven by Low Mortgage Rates, Low Inventory, Says Redfin
June marks the second-straight month that over half of home offers submitted by real estate brokerage Redfin contended with multiple bidders.
Nationwide, nearly 54 percent of Redfin home offers were engaged in bidding wars in the month of June—an increase from just under 52 percent in May and 44 percent in April, Redfin reported on its website.
Bidding wars are being driven by low mortgage rates and low home inventory. Redfin Economist Taylor Marr said, “Bidding wars continue to be fueled by historically low mortgage rates and fewer homes up for sale.” He added, “It’s like a game of musical chairs where only the best bidders get a seat. Both renters and move-up buyers who have held onto their jobs are vying for the small number of single-family homes on the market as they realize they need more space for their families.”
For the week ending July 9 the average mortgage rate fell to 3.03 percent, which is the lowest 30-year fixed-rate number since 1971. Lower mortgage rates, which result in lower monthly housing payments, spurred buyers into the market and encouraged higher offers on homes.
Across the country, the number of homes for sale in June was down by 21 percent from the year prior, decreasing inventory to its lowest level since 2012. In June the supply of single-family residences decreased by 25 percent from last year. The inventory of townhouses dropped by almost 11 percent year over year, and condos saw a 7 percent decline.
Single-family homes and townhouses were most often the objects of buyers’ affection with 56 percent of Redfin offers on single-family homes facing multiple bidders, and 54 percent of townhouse offers. Forty percent of offers on condos were engaged in bidding wars.
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