Bidding wars hit their lowest level since 2011 last month as lower mortgage rates cool competition, according to Redfin.
Only 11% of offers in the United States faced competition, compared to 45% in July 2018, according to Redfin’s latest report. The national bidding war rate has not exceeded 15% since November 2018, after dropping continuously from a peak of 59% in March last year.
Redfin Chief Economist Daryl Fairweather said homebuyer competition has been declining rapidly due to low mortgage rates.
"On a local level, it's noteworthy that some of 2018's fiercely competitive markets—San Jose, Seattle, Los Angeles—have seen their bidding war rates plummet the most year over year,” Fairweather said. “Home prices in these expensive markets have also been falling annually. Overall, I expect homebuyer demand to strengthen in the second half of the year as the housing market continues to stabilize, but we may not see a big pop in bidding wars until early next year."
San Francisco, where 35% of Redfin offers faced a bidding war, ranked as the most competitive market in July. A year ago, 72.4% of offers had competition.
"Although the market isn't as hot as it was last year, this spring and summer have been busy in San Francisco. That's partly because homebuyers are feeling pressure to move quickly due to the high-profile tech IPOs, whether that pressure is real or perceived," said Miriam Westberg, a Redfin agent in San Francisco. "Low interest rates are also a factor in increased homebuyer interest since the beginning of the year. The market has definitely picked up since the winter, and it seems like prices and competition are slowly heading back to mid-2018 levels."
San Diego came next as the second-most competitive market last month, with 21.3% of offers encountering competition. Boston (16.4%), Los Angeles (16%), Philadelphia (14.3%), and Denver (14%) followed. San Jose’s bidding war rate was 13.3%, while Seattle’s percentage was only 7.8%.
Meanwhile, 4.8% of offers in Houston, 6.3% in New York, 6.6% in Dallas, and 7.3% in Las Vegas faced competition. The least competitive market was Miami, with just 1.3% of Redfin offers dealing with bidding wars in July.