In June, just shy of 15% of contracted sales were canceled before closing – the highest rate since the start of the pandemic – as more buyers rethink their decision.
NEW YORK – U.S. home buyers are canceling purchases at the highest rate since the start of the COVID-19 pandemic, reports Redfin. The percentage of sale agreements on existing homes canceled in June was slightly below 15% of all homes that went under contract – the highest portion since early 2020. Cancellations stood at roughly 11% one year ago.
Today, many potential buyers are rethinking their purchases amid an environment of higher mortgage rates and rising inflation. The average rate on a 30-year fixed mortgage started this year around 3% and then began climbing steadily.
Meanwhile, Attom says the costs of owning a median-priced home in the second quarter consumed 31.5% of the average U.S. wage, up from 24% just one year earlier.
Moreover, buyers may no longer see an urgent need to bid for a home that might fall in price in the coming year.
“The slowdown in housing-market competition is giving homebuyers room to negotiate, which is one reason more of them are backing out of deals,” says Redfin’s Taylor Marr. “Buyers are increasingly keeping, rather than waiving, inspection and appraisal contingencies. That gives them the flexibility to call the deal off if issues arise during the home-buying process.”
Source: CNBC (07/11/22) Olick, Diana
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