Slight uptick in home bidding helps sustain interest in mortgages
Home bidding activity tracked by Redfin in September was weaker than a year ago but up compared to August, suggesting purchase mortgage originations haven't been subjected to a seasonal slowdown yet.
Although the 11% share of home offers with competitive bids in September was down from 41% from a year ago, it was up from an eight-year low of 10% in August. During the previous four years, the share of offers with bidding wars dropped by 0.8% on average between August and September.
"After the coolest spring home-selling season in at least eight years, home buying competition didn't have far to fall, but low mortgage rates ultimately drove a modest uptick in bidding wars in late summer when they typically become less common," Daryl Fairweather, Redfin's chief economist, said in a press release. "With mortgage rates likely to remain near historic lows, I expect the bidding war rate to continue to level off — rather than follow its typical end-of-year descent — as 2019 comes to a close."
Mortgage rates were slightly higher at one point in September, but fell later in the month.
Even with rates falling, there was some downward pressure on prices in certain markets due to year-over-year disparities in market demand, according to Redfin.
"Most sellers are pricing their homes a little below the price they expect to sell at which is encouraging bidding wars to drive up price," Kimberly Douglas, an agent at Redfin San Jose, said in the company's press release. "In addition to teaser pricing like this, I've seen very aggressive price drops happening more often lately."