Yet another sign that challenging market conditions and general consumer angst are putting potential homebuyers across the country on edge: Canceled purchase deals are at their highest rate in nearly a decade.
During July, 15.3% of all pending home sales in the U.S. fell apart, likely because the buyer had a change of heart or because there was a problem with an inspection or financing. That was a modest increase from last year at this time but the highest share for any July since at least 2017, according to a monthly report from Redfin.
The cancellation rate in the Twin Cities metro area, where about 10% of all signed deals were scrapped during July, was among the lowest in the nation. Even so, it was up slightly from a year ago.
“We are seeing more of this with higher interest rates, especially in the more affordable [starter home] price ranges,” said Angela Richter, a sales agent with RE/MAX.
She recently listed a house in Columbia Heights for $329,900, and the seller soon accepted an offer, only to re-list it at a lower price after the initial buyer backed out when they couldn’t get financing.
Working-class buyers are far more sensitive to today’s record prices and elevated mortgage rates, placing their deals in a far more precarious position than buyers with bigger budgets and more cash.
That’s partly why houses priced at less than $350,000 are taking much longer to sell than those that are more expensive. Buyers in those upper brackets also have far more options than they did last year.
The supply of for-sale starter houses is up by double digits, while the inventory of more expensive houses has been comparatively flat, according to data from the St. Paul Area Association of Realtors. At the same time, pending sales of houses priced at less than $350,000 are down, and sales of more expensive homes are on the rise.
Source link
