U.S. Housing Market

2. Bidding wars are approaching a ceiling.

For the first time since Q4 2020, the percentage of agents who say "bidding wars in my market are on the rise” declined to 37% — down from 52% the quarter prior. Meanwhile, the group of agents who say bidding wars are at their peak grew from 42% to 54%, indicating that the multiple offer craze could be at its most extreme as it approaches a ceiling. "Buyers are struggling,” said survey participant Lisa Adragna, a top real estate agent serving Long Island. "They are either throwing in the towel or feeling the need to pay way over asking to even be considered for a home.”

4. Price volatility has put restraints on the new construction market.

What's a brand-new house worth in today's market? It's anyone's guess. According to a report from the National Association of Home Builders, the cost of framing lumber used to build houses skyrocketed 250% in the 12 months leading up to April 2021, from $350 to $1,200 per thousand board feet. This has added nearly $36,000 to the average value of a new single-family home.

Our survey shows that buyers are experiencing the ripple effects of the price changes, which have been harsh. In our survey 56% of agents say builders are having to increase prices on in-contract buyers due to raw material cost increases, while 45% report that builders are having to price homes later in the build cycle to account for these fluctuations, fueling uncertainty.

The situation has put buyers on the defensive — 31% of agents say buyers are starting to show reluctance and concern about entering the new construction market, while 16% have seen buyers have to exit their contracts (and lose their hefty deposits) because they're unable to afford the new price of the home.

5. A swell of buyers will rush to lock in a low mortgage rate — but they'll struggle to compete with cash.

As the economy reopens and gradually improves post-vaccine, buyers are operating under pressure knowing the golden era of the sub-3% mortgage won't last forever. As such, 30% of agents in our survey say buyers are encouraged to lock in a low mortgage rate while they can, stoking more demand.

"I am watching people get priced out of a purchase as mortgage interest rates keep them on their toes,” comments survey participant Leigh Tripathi, a top real estate agent in the New York City suburbs. "If they don't lock in at the right moment and rates rise 0.25%, they've lost their shot to buy. This makes all involved nervous because they may be under contract already. In other words, being under contract is no longer considered a done deal.”

Meanwhile, competitive market conditions have fueled a rise in cash deals. "Cash buyers are king,” says survey participant Dave Gaudreau, a top real estate agent in Merritt Island, Florida. "Buyers with finance contingencies cannot compete.”

7. Homeowners on the cusp of retiring are eyeing an opportunity.

The type of seller most likely to be motivated by high prices, according to 60.5% of agents in our survey, are almost-retirees who are cashing out a few years earlier than planned to boost their savings. Agents in the Northeast were even more bullish on this trend — 73.4% of respondents in this region say almost-retirees in their market are looking to capitalize on the moment.