More than 15% of home purchase agreements fell through in July, the highest percentage for that month since Redfin began tracking cancellations in 2017. Cancellation rates rose from lows of 11.6% in 2020 and 2021 as buyers react to rising homeownership costs, job insecurity, and mortgage rates more than twice pandemic-era lows. Increased inventory and fewer competing buyers give remaining shoppers leverage to be picky and sometimes back out close to closing. Common deal breakers include inspection findings, loan failures, and inability to cover appraisal gaps. The buyer advantage may be temporary if borrowing becomes cheaper.
Flash back to the real estate market of just four years ago: homebuyers elbowing their way through crowded open houses, waiving inspections, and bidding up prices in search of the elusive "winning offer." That sense of urgency is long gone. In fact, the formula has flipped. Instead of sprinting through the process, buyers these days are taking their time and haggling over prices. They're also doing something that would have seemed unthinkable in 2021 - backing out of deals just before the finish line.
Call it the year of cold feet. More than 15% of home purchase agreements fell through in July, the highest percentage for that particular month since the real estate firm Redfin began tracking cancellations in 2017. The uptick - an increase from lows of 11.6% in 2020 and 2021 - reveals the market's messy state. Buyers are skittish about the rising costs of homeownership and nervous about their jobs.
With more homes available for sale and fewer buyers to compete with, shoppers who remain on the hunt can afford to be picky. Even after finally submitting that winning offer, they may wonder whether a better bargain could be found elsewhere. "We have lots of homes available," says Rhonda Forte, a real estate broker in Fort Worth, Texas. "If they don't like this one, they can go to the next."
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