Homebuyer competition saw its second consecutive monthly decline in April as surging mortgage rates prompt a growing number of buyers to drop out of bidding wars in some of the nation’s most popular housing markets. Roughly 61% of home offers written by Redfin agents encountered competition on a seasonally adjusted basis in April, down from a revised rate of 63.4% in March and 67.4% a year earlier, Redfin reports.
The average 30-year fixed mortgage rate is up to 5.3%, sending the typical monthly mortgage payment for homebuyers up a staggering 44% year-over-year to a record high of $2,427. As market experts anticipate even more gains in the months ahead, many buyers are choosing not to stick around.
“The meteoric rise in mortgage rates is prompting more house hunters to back out of the market, causing competition to cool,” said Redfin Chief Economist Daryl Fairweather. “Higher rates are also limiting homebuyers’ ability to significantly bid up home prices, meaning some homes aren’t selling for as much over the asking price as they would have a year ago. This could help set off a slowdown in home-price growth in the coming months.”
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