Redfin's report, published Monday, found that 14.5% of US home-purchase agreements signed in September were canceled, about one in every seven deals. The cancellation rate was the highest for any September on record. Only March and April 2020 recorded higher cancellation rates. The cancellation rate never exceeded 12% between 2017 and 2019.
Jacksonville recorded the highest cancellation rate among major US metropolitan areas at 19.9%. Tampa's cancellation rate was 18.8%. Las Vegas recorded a cancellation rate of 18.6%. San Antonio's cancellation rate was 18.5%. The Kobeissi Letter cited Redfin's cancellation data in a post on Tuesday. The Kobeissi Letter also said sellers outnumbered buyers by about 63% in September, the widest gap on record.
Redfin attributed the high cancellation rate to buyers having more options in a strong buyer's market. Buyers may cancel deals because of inspection problems, unexpectedly high monthly payments or a change of mind. Pending home sales fell 4% month over month in September, the biggest monthly decline in more than three years. Redfin said mortgage rates climbed above 7% by the end of the month, adding to affordability pressures.
Redfin head of economic research Chen Zhao said mortgage rates above 7% are making homes less affordable. However, Zhao said reduced competition gives buyers more negotiating power over prices, repairs and closing costs. Zhao said slower sales could cause home prices to flatten or fall. Zhao advised sellers to price realistically and offer concessions to attract buyers.
However, a separate report released Tuesday by the National Association of Realtors (NAR) showed that completed existing-home sales increased 1.5% month over month in September. NAR reported a seasonally adjusted annual sales rate of 3.99 million. Existing-home sales remained down 2.2% from a year earlier. Housing inventory rose 1.9% to 1.60 million homes. The median existing-home price increased 1.3% year over year to $417,500.
NAR Chief Economist Lawrence Yun said August and September were the two slowest months for home sales this year despite September's monthly increase. Yun warned that further mortgage-rate increases could leave fewer buyers able to qualify for a home loan.
US Homebuyers Cancel 1 in 7 Deals in September as Affordability Woes Rise
BenzingaShare
Summary
Interest rate news pushed US homebuyers to cancel 1 in 7 deals in September, per Redfin. A record 14.5% of purchase agreements were canceled as mortgage rates topped 7%. On-chain news showed a 63% seller-to-buyer gap, the widest on record. Buyers gained leverage in the strong buyer’s market. Completed home sales rose 1.5% monthly but fell 2.2% year-over-year, per the National Association of Realtors.
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