U.S. home buyers are canceling deals at the highest rate since the start of the Covid pandemic.
According to a Redfin report, cancelations reach just under 15% in June, the highest share since early 2020.
Higher mortgage rates and inflation at levels not seen in almost four decades are still pushing potential homebuyers to reconsider their purchases and wait to see how the economy evolves in the coming months.
“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 Taylor Marr, Redfin’s deputy chief economist. “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 average rate on the 30-year fixed mortgage now sits at a range around 5.70% now, according to Mortgage News Daily. The rate has almost doubled since the start of the year.
According to analysts, buyers are nervous about a potential recession or expecting home prices to decline.
Home sales were 8.6% lower than in May 2021. The median price of a house sold in May was $407,600, an increase of 14.8% from May 2021.