Discover the Surprising Trend: Homebuyers Canceling Purchases Soar to 10-Month High – Orange County Register

By Natalie Wong | Bloomberg

In a worrisome trend, home purchases across the US are experiencing a surge in cancellations, reaching the highest rate in almost a year. The main culprit behind this development is the increasing borrowing costs that are burdening buyers.

According to a recent report by Redfin Corp, a staggering 60,000 home purchase deals unraveled in August, accounting for approximately 16% of the homes that were under contract last month. This represents the largest share of cancellations since October.

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During the same period, both buyers and sellers abandoned more deals due to mortgage rates surpassing 7% for the first time since November. Data from Freddie Mac shows that the average rate for a 30-year fixed loan has remained above this threshold for the past five weeks.

“I’ve witnessed more homebuyers cancelling deals in the last six months than at any point during my 24-year real estate career,” Jaime Moore, a Redfin agent, revealed in the report. “They’re developing cold feet.”

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Despite the sluggish sales, housing prices have continued to soar due to intense competition among buyers for a limited number of homes, according to Redfin. In August, the median price increased by 3% compared to the previous year, reaching $420,846.

“As long as interest rates remain high, homeowners will be reluctant to sell,” commented Chen Zhao, Redfin’s economics research lead. “The scarcity of homes for sale will also keep prices elevated because it means buyers are fiercely competing for a limited supply of houses.”