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It's a great time to be a home seller as lack of options spark bidding wars

ARI SHAPIRO, HOST:

It's a tough time to be shopping for a house. There aren't a lot of for sale signs as you drive around, and would-be buyers face the double whammy of high prices and high interest rates. It's a great time to be a seller, though. The few homes that are on the market are attracting lots of attention and, in many cases, bidding wars. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: David Lewis' house in Stamford, Conn., has four bedrooms, 2 1/2 baths and an office/man cave over the garage. Lewis put the house on the market less than a week ago for $985,000. His phone's been lighting up ever since.

DAVID LEWIS: In the last 20 minutes, two more people want to see the house in the next half-hour. It's a good thing I have a nice big driveway because it's crazy. You know, people park on your lawns. It's almost a competition at this stage, and people who have been burned already understand better than most that they need to get here early.

HORSLEY: Lewis told me yesterday that 21 would-be buyers came to look at the house over the weekend.

LEWIS: It's amazing. You know, I'm 58 years old. This is the fifth or sixth home that I've owned in my lifetime. I can never remember a time where not only the market is this hot, but it's this hot in spite of mortgage rates at 7% or higher. That's, to me, extraordinary.

HORSLEY: That's Lewis' cockapoo Maggie you hear in the background, appropriate for this dog-eat-dog market. Home sales are not as frenzied as they were a couple of years ago when both interest rates and sales prices were lower. Today's high mortgage rates are keeping a lot of would-be buyers on the sidelines. But they've also discouraged a lot of would-be sellers, who are reluctant to give up their current lower-cost loans. As a result, there's intense competition for the relatively few houses that are on the market. Columbus, Ohio, realtor Buffie Patterson was showing a home for the first time this past weekend. Four dozen people showed up to look.

BUFFIE PATTERSON: Forty-eight people all looking at the same house, right? And there can only be one - you know, I'll put it in quotes - "winner" at the end of the day. So there's, you know, 47 folks who walk away potentially unhappy.

HORSLEY: With the resulting bidding wars, 27% of homes sold in April for more than the asking price. The average went for just over $407,000, a record high for the month. That's a particular challenge for first-time buyers, who typically struggle to come up with a down payment and today's high monthly payments. Still, fully a third of homes sold last month went to first-time buyers. That's the largest share in more than three years. Jill Gilmer, who's a realtor in Milwaukee, says in this market, there's no time for lowball offers and gradual negotiation. Successful buyers have to make their best offer right out of the gate.

JILL GILMER: You've got to really want that house and you've got to play to win. You've got to be ready with your pre-approval when you go in. You've got to be ready to write the offer as soon as you leave the showing. And you've got to write it in a way that it's going to stand out among 10 other offers.

HORSLEY: In a sign of buyers' desperation, nearly 1 out of 5 last month agreed to go through with a purchase no matter what happened during the home inspection or appraisal. There are some signs, though, that the market started to be a little less lopsided. The number of homes for sale is slowly rebounding from rock bottom, up 16% from this time last year. Milwaukee realtor Tom McCormick says, while no one's selling a house on a whim these days, eventually some people do have to move.

TOM MCCORMICK: The real estate happens when life happens - birth, death, marriage, divorce, job change, what have you. Those things force people to make decisions about housing.

HORSLEY: David Lewis, the home seller who had a traffic jam of buyers on his Connecticut lawn, is not going far. He's moving one town away to a new home that's now under construction. Lewis decided to put up the for sale sign now with the new buyer's timing in mind.

LEWIS: This is a house and our location is perfect for a family with kids. And a family with kids wants to be in that house by middle of August to be there in time for the new school year.

HORSLEY: Lewis got four offers overnight. He accepted one today for just over the asking price.

Scott Horsley, NPR News, Washington.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.