Rising interest rates paired with a severe shortage of homes created one of the most competitive housing markets on record during the month of January, Redfin reports. Seventy percent of all home offers written by Redfin agents were subject to bidding wars in January on a seasonally adjusted basis, up from 67.7% in December and 61% just one year ago.
Redfin economists predict that the 30-year fixed-rate mortgage will reach 4.3% by the end of 2022, further inflating housing prices and putting added pressure onto builders trying to meet rising demand during a nationwide supply chain storm.
“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,” said Redfin Chief Economist Daryl Fairweather. “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.”
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