More and more potential homebuyers are backing out of purchases, especially in some of the pandemic’s hottest housing markets.
A little more than 15% of pending home sales (or 64,000 total purchases) fell out of contract in August, according to a new analysis from the real estate brokerage Redfin. In July, 15.5% of pending sales fell out of contact. That was the highest level since 2017, with the exception of two months at the very beginning of the pandemic.
Redfin attributes the sustained uptick in homebuyers backing out of deals to the rapidly cooling housing market. It's not merely about buyers getting cold feet: Less competition, lower prices and more inventory have allowed homebuyers to be more discerning.
“House hunters today are taking their time and exploring their options, whereas six months ago, they had to act quickly and pull out every stop to compete because homes were selling almost immediately,” Tzahi Arbeli, a Las Vegas Redfin real estate agent, said in a statement.
Rising mortgage rates are playing a role too, Redfin said. If rates shoot up during a buyer’s closing process, they may find themselves unable to buy a home they could previously afford.
And it’s not just potential buyers: the cooling market is also forcing builders to slow down. CNBC reported last month that homebuilder cancellation rates had more than doubled since the spring.
Where home sale cancellations are most common
Homebuyers are backing out of purchases at the fastest rate in the Sun Belt, a region that saw explosive demand for housing and price growth over the past two years as people sought more space and more affordable homes.
Here are the top 10 cities where the largest share of would-be buyers are backing out of deals, according to Redfin. In every city on the list, more than one in five pending sales fell out of contract in August.
- Jacksonville, Florida: 26.1%
- Las Vegas, Nevada: 23%
- Atlanta, Georgia: 22.6%
- Orlando, Florida: 21.9%
- Fort Lauderdale, Florida: 21.7%
- Phoenix, Arizona: 21.6%
- Tampa, Florida: 21.5%
- Fort Worth, Texas: 21.5%
- San Antonio, Texas :21.1%
- Houston, Texas: 20.6%