people holding up bidding signs

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Buyer competition was unseasonably hot in January. Many house hunters continued to face bidding wars as housing inventories dropped to all-time lows.

The National Association of REALTORS® reported the fewest number of homes for sale on record in January. Nearly 80% of homes on the market sold in under a month.

As mortgage rates rise, buyers may feel pressure to lock in rates ahead of any further increases. Seventy percent of offers on homes for sale written by Redfin real estate agents faced competition in January, the highest share since at least April 2020 when Redfin began tracking such agent data.

“Rising mortgage rates are intensifying an already-severe shortage of homes for sale because buyers are feeling more urgency to buy while homeowners are feeling less urgency to sell—an imbalance that’s fueling an increase in competition,” says Daryl Fairweather, Redfin’s chief economist. “Buyers are battling it out for the few homes on the market in an effort to lock in relatively low payments before rates move even higher, but homeowners who bought or refinanced in the last year are staying put because they don’t want to lose their rock-bottom mortgage rate.”

In a four-week period ending Feb. 13, 57% of homes that were under contract had an accepted offer in their first two weeks on the market, according to Redfin’s index.

Townhomes appeared more competitive than other property types. Nearly three-quarters of offers on townhomes saw competition in January. 

Of the 40 metro markets tracked by Redfin, some of the highest rates of bidding wars were in Spokane, Wash. (83.3% of offers written faced a bidding war); Sacramento, Calif. (80.4%); Seattle (79.7%); Dallas (78.1%); and San Jose, Calif. (76.5%).