Falling mortgage rates and strong employment has driven US housing sentiment to a record high in July, according to a monthly index from Fannie Mae.
At the same time, bidding wars have eased thanks to lower demand in some of the hottest property markets in the US.
US Mortgage rates have dropped dramatically this spring, down from a high of around 4.5 per cent at the start of this year to 3.85 per cent at the end of July, helping to cause a rise in housing sentiment.
Fannie Mae’s chief economist, Doug Duncan, said: ‘Consumers appear to have shaken off a winter slump in sentiment amid strong income gains. Therefore, sentiment is positioned to take advantage of any supply that comes to market, particularly in the affordable category.’
Bidding wars have fallen to the lowest rate since 2011, also helping to improve housing sentiment. A report from real estate brokerage Redfin showed that just 11 per cent of offers written by agents faced a bidding war in July, down from more than 45 per cent a year ago.
The most competitive markets such as San Jose, Seattle, and Los Angeles have seen their bidding war rates plummet the most year over year.
San Diego was the most competitive market in July, with 21 per cent of Redfin offers facing competition. Boston and Los Angeles came next at 16 per cent, Philadelphia (14 per cent) and Denver (14 per cent).
Miami, long favoured by UK overseas property investors, was the least competitive market in July, with just over 1 per cent of offers facing competition. Houston, New York, Dallas and Las Vegas also saw lower than average competition.
However, while sentiment may be up and the housing market may be less competitive overall, supply at the entry level is still extremely tight, and prices there continue to rise faster than the rest of the market. That is why there is such strong rental demand right now, as first-time buyers are sidelined.