Home-purchase contracts in the US were canceled at a record rate for July as jittery buyers got cold feet.
About 58,000 agreements fell through last month, equivalent to 15.3% of homes that went under contract, according to Redfin. It was the highest cancellation rate for a July in data going back to 2017, the brokerage reported.
It’s not just that the housing market’s expensive, with mortgage rates still elevated and home prices that have soared 50% since early 2020. Buyers are also pulling back more than usual now because of uncertainty over the economy. Plus, with more listings to choose from in many parts of the country, there’s less urgency.
Cancellations were especially high last month in construction-heavy areas where inventory has piled up. San Antonio, Texas, where almost 23% of purchases fell through, led the way, followed by Florida’s Fort Lauderdale and Jacksonville, and Atlanta.
Buyers “hold the negotiating power in many markets and often aren’t in a rush,” Redfin said in the report. “They may hold back during the inspection period if a better home comes up for sale or they discover an issue they don’t want to fix.”
In the Virginia Beach, Virginia, area, known for its military bases, the cancellation rate jumped to 16.1% from 12.5% a year earlier, the biggest annual increase among the metro areas in the brokerage’s analysis.
Jeremy Caleb Johnson, an associate broker with Long & Foster in Virginia Beach, said many people who scooped up homes during the post-pandemic buying frenzy are now trying to resell properties that need work.
Many of those buyers waived inspections just to win bidding wars, he said. Now they’re throwing on a coat of paint and focusing on the flower beds rather than making expensive repairs. Shoppers in the hunt now are no longer willing to look the other way, he said.
“Buyers are having economic nausea — they’re feeling queasy about the market,” Johnson said. “They want to buy a house but sometimes it’s too overwhelming when they start to focus on all the moving parts and all the costs involved. Sometimes it’s easier for them to cancel and get some fresh air and breathe.”
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