Home sales falling through at highest pace since pandemic began

With a tempering market that has left more room to negotiate, homebuyers are backing out of sales deals at the highest rate since the COVID-19 pandemic began — although some deals are falling through because rising mortgage rates are placing homes out of buyers’ financial reach.

That’s according to a new report from Redfin, which revealed that approximately 60,000 home-purchase agreements were canceled in June, representing 14.9% of homes that went under contract during the month. That’s the third-highest share of canceled deals on record, trailing only March and April 2020, when the COVID-19 pandemic first started to cause chaos with the housing market and the U.S. economy at large. Those months saw 17.6% and 16.4% of home-purchase agreements fall through, respectively.

June’s share of home sales that were cancelled is up from 12.7% in May and 11.2% in June 2021.

“The slowdown in housing-market competition is giving homebuyers room to negotiate, which is one reason more of them are backing out of deals,” said Taylor Marr, Redfin’s deputy chief economist. “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 homebuying process.”

Marr added, however, that some deals are being called off due to the steadily elevating interest rate environment, which is pulling the rug out from some buyers whose offers were made before rates increased.

“If rates were at 5% when you made an offer but reached 5.8% by the time the deal was set to close, you may no longer be able to afford that home or you may no longer qualify for a loan,” Marr said.

Among metro areas that had at least 1,000 pending home sales in June, Las Vegas recorded the largest share of pending sales that fell out of contract at 27.2%. Joining Las Vegas in the top five were four cities in Florida: Lakeland (26.7% of pending sales canceled), Cape Coral (25.7%), Port St. Lucie (25.7%) and Jacksonville (25.3%). Seven of the top 10 cities for canceled home sales in June were in Florida while all 10 were in the South or Southwest regions.


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