High mortgage rates and soaring home prices have prompted potential buyers to cancel deals at the highest rate in a year, according to Insider. In September, 16.6% of monthly pending home sales fell through, the most since October 2022 when mortgage rates exceeded 7%. Buyers are being cautious, due to rising mortgage payments and a desire for better deals, leading to a greater likelihood of backing out of contracts.
Transactions are also falling apart due to escalating insurance premiums and disputes over necessary repairs. Sellers, fearing future price drops, may be more motivated to close deals. Among the 50 most populous metro areas, Atlanta topped the list with 24.4% deal cancellations.
"A lot of Americans are sitting on piles of money in their homes, and some are opting to cash out even if it means giving up their low mortgage rate; they're worried there's a possibility home prices will fall if rates remain elevated. We expect rates to remain high for the foreseeable future," said Redfin's Chief Economist, Daryl Fairweather. "But we also expect prices to stay high into next year. Housing supply is so strained that even a small uptick in listings lures buyers off the sidelines, bolstering sales."