Homebuyers are canceling deals at the highest rate since the start of the pandemic

Abstract

Americans are canceling deals to buy homes at the highest rate since the start of the Covid pandemic. The share of sale agreements on existing homes canceled in June was just under 15% of all homes that went under contract, according to a new report from Redfin. Higher mortgage rates and surging inflation are causing many potential homebuyers to reconsider their purchases. The costs of owning a median-priced home in the second quarter required 31.5% of the average U.S. wage, according to a report by Attom, a property data provider. "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." Homebuilders are also seeing higher cancelation rates. Even before the sharpest increase in rates in June, cancelations in May jumped to 9.3% in a survey of builders by John Burns Real Estate Consulting. Lennar, one of the nation's largest homebuilders, said in its most recent quarterly earnings report that its cancelation rate did increase sequentially to 11.8% but was below its long-term historical average.