After months of extraordinarily warm housing market conditions, homebuyers across the United States faced the lowest level of competition in a year, with rising mortgage rates deterring some potential buyers from moving and to have an impact on the budget of others.
About 61% of homes nationwide experienced bidding wars in April, down from 63.4% in March, and the lowest rate of competition since March 2021, according to a Redfin report released Wednesday. This figure was also down from 67.4% in April 2021, when the housing market was exceptionally competitive.
The bidding wars in the United States began to slow in March, after mortgage rates hit record highs in a decade.
“Skyrocketing mortgage rates are causing more house hunters to pull out of the market, which is chilling competition,” said Daryl Fairweather, Redfin’s chief economist, in the report. “Higher rates also limit homebuyers’ ability to significantly increase the price of homes, which means some homes aren’t selling as much above asking price as they would have a year ago. . This could help trigger a slowdown in house price growth in the coming months. »
Pending home sales fell 6% from a year ago, the biggest drop since June 2020. Mortgage applications also fell, by 8%, and the share of home sellers who reduced their initial asking price was 16%, the highest rate in seven months. , according to the report.
Of 36 metro areas, Riverside, Calif., saw the biggest drop in homebuyer competition with a nearly 22% drop year-over-year. It was followed by Altanta with a decline of 15.2%; Olympia, Washington, with 15.1%; San Diego with 14.9% and Raleigh, North Carolina with 14.8%
Riverside also had the lowest overall bid war rate at 42.7%, followed by Miami at 53.7%, Atlanta at 56%, San Antonio at 58.8% and New York at 59.5%.
On the other hand, some metropolitan areas have experienced much higher bidding wars than the national average. The highest bidding war rate was recorded in Worcester, Massachusetts, at 76.9%; followed by Denver with 76.6%; Boston with 74.8%; Providence, Rhode Island, with 74.1% and Detroit with 74%.
Townhouses were again the most competitive property type, with nearly seven in 10 facing competition during the sales process.
The rental market is also showing signs of slowing as growth in asking rent slowed for the first time in a year, recording a 15% year-on-year increase in April, down from the 17% increase from March, according to another Redfin report made public on Wednesday.
Still, the median U.S. rent price hit an all-time high in April at $1,962.
Even with the average 15% increase nationwide, some metro areas have seen even more extraordinary increases in rental prices.
Austin saw the largest year-over-year increase in rent prices at 46%, followed by other coastal cities and major metropolitan areas. Next comes Portland with 33%; Miami with 31%; Fort Lauderdale, Florida, with 31%; West Palm Beach, Florida, with 31%; Seattle with 31%; New York with 28%; Newark, New Jersey, with 28%; Nassau County, New York, with 28% and New Brunswick, New Jersey with 28%.
“The fact that rents are rising at a slower rate may be a very early sign that the Fed’s tactic of raising interest rates to stifle inflation is working,” Ms Fairweather wrote in the report. “However, rents continue to rise at nearly double the rate of overall inflation. Landlords in hot migration destinations like Austin, Portland and South Florida are charging new tenants 30% more than the rent of the apartment. ‘last year.