Housing market is tilting in favor of buyers, Redfin says

The current housing market appears to be tilting slightly more in the favor of buyers, marking a reversal of last year's trends, the latest research from Redfin shows.

The online brokerage reported only 44.3% of bids written by its agents in July faced competing offers, falling for the sixth month in a row to the lowest share since April 2020. One month ago, 50.9% of buyers faced competition, while in July 2021, the share was almost 63.8%.

The decline in buyer interest resulted in an average of 3.5 offers for each home involved in a bidding war, down from 4.1 in June and 5.3 year over year, as higher interest rates and elevated prices, compounded by inflation, lead many potential homeowners to abandon their search. 

A separate Redfin report this week provided more evidence of the extent to which market conditions have changed over the 12 months. In the four weeks preceding August 7, new listings of for-sale homes dropped 12% on an annual basis, the largest decrease in over two years. At the same time, overall housing supply is now 4% higher from a year ago. Approximately 8% of listings on the market each week are seeing a price cut, Redfin said.

"Buyers are backing off due to rising housing costs, and sellers are holding back because they realize they won't get the bidding war they would have gotten six months ago," said Taylor Marr, Redfin deputy chief economist, in a press release. 

Some of the hottest markets for purchases and price growth during the boom of 2020 and 2021, fueled in part by COVID-19 migration, are now feeling the big chill, Redfin said. 

Phoenix had the lowest share of home offers facing competition at 26.6%, just about half the percentage from a year ago of 53.9%. Ahead of Phoenix was Riverside, California, at 31%, and Seattle at 31.5%, with both cities also experiencing similar steep annual declines from 64.3% and 60.1%. 

Two other cities that saw recent accelerated growth rounded out the bottom: Austin, Texas, where 31.7% of offers had competing bids compared to 62.1% in July 2021, and Nashville, Tennessee, at 33.3%, down from 73.1%. 

Of the 36 metropolitan markets in Redfin's reporting, Orlando, Florida, experienced the largest year-over-year decrease in competing-bid offers, dropping to 37.4% from 81.4%. No areas saw the bidding-war rate increase.

At the other end of the spectrum, Raleigh, North Carolina, headed the list of cities in the share of competing bids relative to offers in July at 63.8%, closely followed by Honolulu at 63%, Providence, Rhode Island with 60.5%, Philadelphia at 60.4% and Worcester, Massachusetts with 54.8%.

Redfin's data lends support to findings by Fannie Mae, who reported sentiment toward home purchases falling to an 11-year low in July. A growing number of consumers found conditions less favorable for both buying and selling in the current market.