SALT LAKE CITY (ABC4) – It’s no secret that home sales are sky high, with not much relief in sight.
But now, according to a report from Redfin, there’s a new problem with homes.
Home sale cancellations have hit their highest numbers since the beginning of the pandemic.
The report shows that 60,000 home purchase agreements broke down in June, which equates to 14.9% of the amount of homes that were put under contract during that month.
This is the highest number since the beginning of the COVID-19 pandemic, with the exception of March and April of 2020, when home sales were paused.
“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.”
The percentage was at 11% a year before.
But what’s causing this?
Yep, you guessed it, inflation. But the increase in mortgage rates hasn’t helped, either.
“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” Marr explains.
Here’s where Salt Lake City stands in terms of home purchases that fell through in June:
|U.S. Metro Area||Pending Sales that Fell Out of Contract as % of Overall Pending Sales|
“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,” the report from Redfin states.
Stats show the housing market has cooled off recently, as the federal reserve boosted interest rates in an effort to battle inflation, which just hit a 40-year-high in June.