A highly competitive U.S. housing market started to show signs of easing slightly in September, particularly in parts of the Southeast, according to data released Tuesday.
There was a slight decline in bidding wars last month, with the percentage of offers vying with a competing bid standing at around 56%, down from 59% in August, according to the report from real estate firm Redfin. It’s still an unseasonably high level of competition for the market, which has been tipped in sellers’ favor since coronavirus lockdowns began easing in early summer.
The market may be headed for a slower period over the holiday months, but “homebuyers are still sweating as they navigate what remains an unseasonably hot seller’s market,” said Daryl Fairweather, chief economist at Redfin said.
Competition has begun to ebb, for example, across some Southeast metro areas, where the percentage of homes facing bidding wars halved from August to September.
Brian Walsh, an agent with Redfin working in the Tampa, Florida, area, said that bidding wars were ubiquitous until a sudden shift took place last month. Buyers are now chafing at sellers “pie-in-the-sky, aspirational pricing,” Mr. Walsh said.
“It's getting to the point where you'll see a seller demand $50,000 over what they paid a year ago—and the only thing they've done to the home is minimal DIY renovations, like slapping on some new paint and flooring,” he said, adding that many of his buyers have decided to take a break from the market until prices cool off.
By contrast, competition continued to heat up in Salt Lake City, Utah, with more than 80% of all offers facing a competing bid in September, an increase from 69% in August, according to Redfin. Secondary and tertiary cities in the Rocky Mountains have seen a surge of demand in the wake of the pandemic as home shoppers look for space and respite.
Meanwhile, West Coast markets with a chronic shortage of homes for sale remained among the most competitive after Salt Lake City. More than two-third of all offers in San Diego and the San Francisco-Silicon Valley area were met with competing offers.
Dealmaking was also highly competitive in greater Washington, D.C.; Minneapolis; Portland, Oregon; and Austin, Texas, according to Redfin.
One caveat has been in the condo market, where demand remained weaker than for single-family homes. Only 40.5% of condo offers vied with a competing bid in September.