Home Sales Are Getting Canceled at the Highest Rate Since the Start of the Pandemic
July 11 2022 - 8:30AM
Business Wire
Some homebuyers are backing out of deals as
a slowing housing market gives them more room to negotiate. Others
are being forced to renege on contracts because higher mortgage
rates mean some homes are no longer affordable.
(NASDAQ: RDFN) — Nationwide, roughly 60,000 home-purchase
agreements fell through in June, equal to 14.9% of homes that went
under contract that month, according to the latest analysis from
Redfin (www.redfin.com), the technology-powered real estate
brokerage. That’s the highest percentage since March and April
2020, when the housing market all but ground to a halt due to the
onset of the coronavirus pandemic. It compares with 12.7% a month
earlier and 11.2% a year earlier.
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Deals in the housing market are falling
through at Fastest Clip Since 2020 (Graphic: Business Wire)
“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 Redfin Deputy Chief Economist 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 homebuying process.”
Marr continued: “Rising mortgage rates are also forcing some
buyers to cancel home purchases. 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.”
The housing market has cooled in recent weeks as the Federal
Reserve has boosted interest rates in an effort to quell inflation.
That has given house hunters more freedom to seek concessions from
sellers, but higher rates also make housing less affordable. Buyers
did get a reprieve this past week, when the average 30-year fixed
mortgage rate fell to 5.3% in the largest one-week drop since
2008.
“When mortgage rates shot up to almost 6% in June, we saw a
number of buyers back out of deals,” said Lindsay Garcia, a Redfin
real estate agent in Miami. “Some had to bow out because they could
no longer get a loan due to the jump in rates. Buyers are also more
skittish than usual due to economic uncertainty.”
Redfin’s analysis is based on multiple listing service data
going back through 2017. Please note that homes that fell out of
contract during a given month didn’t necessarily go under contract
the same month. For example, a home that fell out of contract in
June could have gone under contract in May. This report, along with
additional housing market data, is available at:
https://www.redfin.com/news/home-purchases-fall-through-2022.
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
instant home-buying (iBuying), rentals, lending, title insurance,
and renovations services. We sell homes for more money and charge
half the fee. We also run the country's #1 real-estate brokerage
site. Our home-buying customers see homes first with on-demand
tours, and our lending and title services help them close quickly.
Customers selling a home can take an instant cash offer from Redfin
or have our renovations crew fix up their home to sell for top
dollar. Our rentals business empowers millions nationwide to find
apartments and houses for rent. Since launching in 2006, we've
saved customers more than $1 billion in commissions. We serve more
than 100 markets across the U.S. and Canada and employ over 6,000
people.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20220711005232/en/
Contact Redfin Redfin Journalist Services: Alina
Ptaszynski, 206-588-6863 press@redfin.com
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