According to Redfin, nearly 60,000 purchase agreements were canceled in July - the highest percentage of any July on record. (WDBJ)
U.S. homebuyers are backing out of their real estate deals at a record rate.
According to Redfin, nearly 60,000 purchase agreements were canceled in July - the highest percentage of any July on record - and sales of existing homes fell at an annual rate of 2%.
“Many house hunters are getting cold feet because housing costs remain high. Economic uncertainty is also high, with recession fears on the rise,” Redfin data journalist Lily Katz wrote.
Pending sales of both existing homes and newly constructed homes also dropped to the lowest level on record last month aside from April 2020 when the pandemic brought the economy to a screeching halt.
Redfin reports they declined 2.9% from a month earlier and 5.8% from a year earlier, both the biggest declines in nearly a year.
Mortgage rates have seen a slight decline over the past few months but that hasn’t necessarily helped while still staying above 6%.
“The Federal Reserve is expected to start cutting interest rates in September and continue through 2025, but markets have priced in a fairly fast pace of rate cuts already, which means homebuyers are unlikely to see a large drop in mortgage rates in the near future,” Katz shared.
Redfin Senior Economist Elijah de la Campa said waiting for mortgage rates to fall isn’t the best strategy either.
“If you have the means to buy and have been thinking about doing so, now actually might not be a bad time,” de la Campa shared. “That’s because mortgage rates have fallen enough to boost your purchasing power, but not enough to bring tons of buyers off of the sidelines and drive up competition.”
When it comes to encouraging signs for homebuyers, Redfin mentions the total supply of homes for sale rose a record 13.7% year over year in July, and only a third of homes sold for more than their asking price, down from 38% a year earlier and the lowest since July 2020.