Bidding wars dropped to their lowest level since February 2021 as the housing market begins to cool, with only 57.8% of home offers facing competition in May, according to Redfin.
Though more than half of prospective buyers are still facing competition when bidding on a home, that number is down from 60.9% the month prior and a pandemic peak of 68.8% a year earlier.
A typical home received 5.3 offers in May, down from 6.8 in April and 7.4 in YOY. This is the fourth straight month of declines.
The unadjusted bidding war rate was 60.8%, down from 67.8% month-over-month and 71.8% YOY.
“Homes are now getting one to three offers, compared with five to 10 two months ago and as many as 25 to 30 six months ago,” said Jennifer Bowers, a Redfin real estate agent in Nashville.
“Offers also aren’t coming in as high above the list price as before. I recently listed a three-bedroom, three-bathroom home in a super cute neighborhood for $399,900. It ended up going under contract for $12,000 above the list price with an inspection, whereas three months ago, the buyer probably would have paid $60,000 over asking and waived the inspection.”
Providence, RI, saw the most dramatic drop in bidding wars at 45.3%, down from 82.7% at the same time last year.
Worcester had the highest rate of competition, 81.8%, followed by Las Vegas (74.5%), Boston (72.6%), Dallas (72.3%), and Philadelphia (69.3%).
The Northeast has remained relatively affordable compared to the massive home price increases in the South and Southwest. This has turned some Northeastern cities into the hottest housing markets in the country, which may explain Philadelphia, Worcester, and Boston’s high rates of competition.
Las Vegas’s competition, on the other hand, may be influenced by the high number of properties being bought by investors in Nevada.
“That’s probably one of the biggest reasons we have a lack of inventory because normally a homeowner comes in, they live in a house maybe five to seven years and then sell it and buy another one,” Tom Blanchard, president-elect of Nevada Realtors, told Nevada Public Radio.
“Well, those corporate investors, they’re buying and holding, taking those homes that would normally have come through and turned, for a better word, and kept them, keeping other homeowners – that first-time homeowner, a move-up homeowner, a second homeowner – they’re all squeezed out of the market because there’s nothing for them to buy because those corporate investors have come in and purchased all those homes.”