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M R EP O RT | 41 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Buyer Budgets Remain Constrained Housing-market competition is declining rapidly due to higher mortgage rates and home prices, amid inflation and a falling stock market, causing many house hunters to drop out of the market completely. N ationwide, nearly 50% of home offers writ- ten by Redfin agents faced competition on a seasonally adjusted basis in June, according to a report from Redfin. That's the lowest share since May 2020, and the first time the bidding-war rate has been below 50% since that same month, when the housing market was at a near standstill due to the onset of the coronavirus pandemic. June's bidding-war rate compares with a revised rate of 65% one year earlier and 57.3% one month earlier— marking the fifth-straight monthly decline. Housing-market competition is declining because higher mortgage rates, high home prices, infla- tion and a falling stock market have eroded homebuyer budgets, causing some house hunters to drop out of the market. Roughly 60,000 home-purchase agreements were called off in June, equal to 14.9% of homes that went under contract that month. That's the highest percentage on record, with the exception of the start of the pandemic. The typical monthly mortgage payment for a homebuyer is now $2,387 at the current 5.51% mortgage rate, up 44% from a year ago. "While the market is cooling, it's not coming to a crashing halt," said Shoshana Godwin, a Redfin real estate agent in Seattle. "House hunters who can still afford to buy should consider taking advan- tage of the slowdown given that there's way less competition." Homebuyer Competition Fell the Most in Riverside, Raleigh, and Charlotte In Riverside, California, 31.9% of home offers written by Redfin agents faced competition in June, down from 70.5% a year earlier. That 38.6-percentage-point decline was the largest among the 36 U.S. metropolitan areas in this analysis. Next came Raleigh, North Carolina (38.9% vs. 74.1%; -35.2 ppts), Charlotte, North Carolina (48.1% vs. 80%; -31.9 ppts), Seattle (41.4% vs. 71.6%; -30.2 ppts), and Honolulu (38.9% vs. 69%; -30.2 ppts). "Showings have dramatically decreased. Homes that would've had 20 showings two months ago are now getting one or even none," said Jenny Dedrick, a Redfin real estate agent in Minneapolis, where the bidding- war rate fell to 45.7% in June from 65% a year earlier. "I had one seller take his home off the market be- cause it only got one showing. He decided to rent it out instead. He's moving to Mexico and thought, 'why not let it sit and keep ap- preciating?'" Competition increased on a year-over-year basis in just two of the 36 markets Redfin analyzed. In Colorado Springs, Colorado, 55.9% of home offers written by Redfin agents faced competition in June, up from 45.9% in June 2021 (+10 ppts). In Providence, Rhode Island, the bidding-war rate rose slightly, to 77.6% in June from 77.1% a year earlier. Bidding Wars Remain Common in Providence, Boston, and Philadelphia In Providence, 77.6% of home offers written by Redfin agents encountered competition in June—a higher share than any other metro in this analysis. It was followed by Boston (71.7%), Philadelphia (65.7%), Indianapolis (64.3%), and Worcester, Massachusetts (62.7%). Tampa, Florida, had the low- est bidding-war rate, at 28.9%. Rounding out the bottom five were Riverside (31.9%), Phoenix (35.3%), Honolulu (38.9%), and Raleigh (38.9%). Townhouses Are Most Likely to Encounter Competition Townhouses were more likely than any other property type to encounter bidding wars, with 54.6% of Redfin offers facing bid- ding wars in June. Next came single-family homes (52.3%), fol- lowed by condos/co-ops (47%), and multifamily properties (41.3%).