According to real estate brokerage Redfin, approximately 58,000 purchase agreements collapsed in July, representing more than 15 per cent of homes that went under contract.
This marks the highest cancellation rate for July since Redfin began tracking this data in 2017.
Texas and Florida markets experienced the most significant number of scrapped contracts. San Antonio topped the list with nearly one in four deals being cancelled, while Florida metros, including Fort Lauderdale, Jacksonville, and Tampa, also recorded some of the highest cancellation rates nationwide.
Bonnie Phillips, a Redfin agent in Cleveland, identified the most common reasons buyers back out.
“The most common reasons buyers back out are cold feet, high standards, and inspection issues,” Ms Phillips said.
She said that cancellations are especially prevalent among borrowers using Federal Housing Administration loans and Department of Veterans Affairs loans, who often face additional financing challenges.
The National Association of Realtors (NAR) reported that existing-home sales rose 2 per cent in July to an annual rate of just over 4 million units, showing a modest improvement from June’s nine-month low.
Despite this small uptick, affordability remains the market’s primary challenge.
The median existing-home price stood at US$422,400 in July, virtually unchanged from a year earlier.
Meanwhile, mortgage rates averaged 6.7 per cent in July, more than double what buyers could secure three years ago.
Homebuilders are also feeling the pressure.
The National Association of Home Builders (NAHB) reported that builder sentiment fell in August to its lowest level in more than two-and-a-half years.
More than a third of builders reported cutting prices by an average of 5 per cent, while two-thirds offered incentives such as assistance with closing costs.
Construction data reflects this slowdown, with single-family housing starts falling to an 11-month low in June, though July showed some improvement.
While mortgage rates have eased slightly in recent months and markets expect the Federal Reserve to cut rates soon, experts caution that mortgage rates may not necessarily follow suit if inflation remains elevated.
