About 14.9% of home-purchase agreements nationwide fell through in June, the highest percentage since the real estate industry ground to a halt at the start of the COVID-19 pandemic, a Redfin analysis found.
That percentage was even higher in Chicago, where it was 16.7%. Las Vegas was the city with the highest percentage, at 27.2.
“The slowdown in housing-market competition is giving homebuyers room to negotiate, which is one reason more of them are backing out of deals,” said Redfin Deputy Chief Economist Taylor Marr. “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.”
Marr continued: “Rising mortgage rates are also forcing some buyers to cancel home purchases. If rates were at 5% when you made an offer, but reached 5.8% by the time the deal was set to close, you may no longer be able to afford that home or you may no longer qualify for a loan.”
Redfin found about 60,000 home-purchase agreements across the country were not completed as scheduled in June. Buyers are more skittish than usual because of interest rate changes, said Lindsay Garcia, a Redfin real estate agent in Miami.
“When mortgage rates shot up to almost 6% in June, we saw a number of buyers back out of deals,” she said. “Some had to bow out because they could no longer get a loan due to the jump in rates.”