The rate of bidding wars in the housing market continued a five-month decline in September to a low point for 2021.
In a return to seasonal norms, homebuyers faced less competition in September than they did at any other point in 2021.
The bidding war rate fell to 58.9% in September, down from a 2021-peak of 74.3% in April, according to Redfin, a national real estate brokerage. This rate represents the share of offers submitted by Redfin agents that faced at least one competing bid.
Bidding wars typically become less frequent in fall as the weather and housing market cool off. Due to pandemic disruptions, that was not the case last year. August, September, and October featured the highest rate of bidding wars. Just under 60% of homes saw multiple offers as the market stayed active well into the traditional off season.
This year’s return to normal is a welcome one for homebuyers sidelined by intense competition over the summer. Bidding wars tend to drive up the sales price of a home and put homebuyers with less cash at a disadvantage.
The bidding war rate has decreased every month since April and now rests at its lowest point of the year with some of the best home buying months ahead. This coincides with a slow-down in home price increases and a moderate increase in inventory.
Although bidding wars are on a downward trend nationally, some markets are still in the throes of intense competition. Raleigh, N.C. boasted the highest share of bidding wars in September, despite a 5.3 percentage-point decrease from the previous month.
|Metro||Bidding war rate September 2021||Bidding war rate August 2021||Percentage point change|
Other metros saw a significant decrease in their bidding war rate. Milwaukee, WI featured the lowest bidding war rate at 24.1% after a 23.5 percentage point drop from August to September.
|Metro||Bidding war rate September 2021||Bidding war rate August 2021||Percent point change|
|Virginia Beach, Va.||41.5%||60.8%||-19.3|
Overall, the imbalance of supply and demand in the housing market still heavily favors sellers. Inventory is still very low and the typical home in September was on the market for just 18 days --11 less than the year before.
However, with bidding wars on the decline homebuyers are facing less competition amongst each other. And according to Redfin Deputy Chief Economist Taylor Marr, this trend is expected to continue as rising mortgage rates tie a weight on demand.
In the near-term, the seasonal decline in bidding wars may provide a window of opportunity for homebuyers that were sidelined by bidding wars during the busy spring and summer.