It’s spooky season for home buyers. Mortgage rates hovering around 8% and a combination of other factors making housing more expensive are pushing skittish home buyers to bail on their home purchases at the highest level in nearly a year.
Roughly 53,000 home-purchase agreements were cancelled in September, real-estate brokerage Redfin
RDFN,
said on Monday, which is about 16.3% of all the homes that went into contract that month. That’s the highest share of cancellations since October 2022, the company noted, when mortgage rates pushed past 7%.
Now, some lenders are quoting 8% rates for 30-year mortgages, making it much costlier to buy a home with a mortgage. A typical home buyer who intends to purchase a median-priced home will have to allocate a little over $3,000 a month for their 8% mortgage, versus $2,600 if rates were at 6%.
“Buyers are extra cautious right now,” Heather Kruayai, a Jacksonville, Fla.-based real-estate agent with Redfin, said.
“They want to make sure they’re getting a good deal given how much mortgage payments have gone up, and when they don’t feel like they’re getting a good deal, they’re backing out,” she added.
The median home sale price in September was $412,081, Redfin said, up 1.9% from the previous year.
Where cancellations are the highest
Among the top 50 most populous metro areas, those with the highest share of homes that went under contract and then saw buyers walk away include Atlanta, Jacksonville, Orlando, Tampa, and Fort Lauderdale.
Nearly a quarter of homes (24.4%) that went under contract in Atlanta were cancelled, and in Jacksonville, 24% of purchase deals fell through. Orlando ranked third at 23.6% of homes that fell out of contract.
A year ago, Jacksonville took the top spot, and Atlanta second.
Kruayai, the Florida-based agent, noted that buyers in the state had other considerations when buying a home that pushed them to walk away.
“Transactions are also falling apart due to skyrocketing insurance premiums and disagreements between buyers and sellers over necessary repairs,” she said. “Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close the deal.”
No big opportunity for other buyers
To be clear, even though buyer cancellations are rising, that doesn’t mean that there are a number of homes back on the market for other buyers, Redfin noted.
Prices are still rising because buyers are competing to buy a very limited number of homes on the market. Redfin agents add that competition is particularly fierce over starter homes, because housing affordability is being stretched even further as rates rise.
A third of homes that were sold fetched over the final list price in September, Redfin said.
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