Majority of October home sales faced bidding wars

The continual lag in housing inventory relative to demand and low mortgage rates kept homebuyer competition heated in October.

While the share of home sales with bidding wars dwindled as activity slowed seasonally into the fourth quarter, October marked the sixth consecutive month where over half of homes for sale faced competition, according to Redfin.

About 56.8% of U.S. properties underwent bidding wars in October, down from September's revised rate of 57.4% and the 2020 peak of 59.3% in August. However, the share of bidding wars greatly surpassed the year-ago rate of 10.1%.

In back-to-back months, Salt Lake City held the top spot for most competition, as 75% of listings underwent bidding wars. San Diego came second with 73.2% competition share and the combined statistical area of San Francisco-San Jose followed with 69.6%. Austin, Texas, Washington, D.C., Sacramento and Seattle also had bidding war shares above 60%. Of the 24 metro areas in the study, Las Vegas had the lowest competition at 38.2%, narrowly edging out Miami's 38.5%.

Tampa, Fla., saw the biggest rise in competition, jumping to a 51.2% share from 26.3% in September. New York sat at the other end of the spectrum with the largest decline, falling to 45.3% from 58.5%.

Anecdotal evidence from the report suggests waiving appraisal contingencies gives buyers the biggest advantage in this competitive marketplace, even more so than all-cash bids.

A separate report from Zillow shows the fierce competition keeps pulling down the average availability for listings. For-sale properties spent an average of 12 days on the market in October, down from 16 days in September and 29 days in October 2019.

"The housing market is taking us all back to Economics 101 and teaching lessons about supply and demand," Chris Glynn, Zillow senior economist, said in a press release.

"A persistent interest in buying and moving is creating an imbalance that is driving prices higher than we typically see at this time of year. In many cases, buyers in this market should be realistic about the chance of bidding wars and leave themselves financial flexibility by looking at homes listed for less than their maximum price point. With tight inventory, low interest rates, and robust demand from households re-evaluating their housing needs, a strong, competitive market with many transactions is likely here to stay into 2021."