Americans are canceling their homebuying deals at the highest rate since the start of the pandemic, and homebuilders are also reporting a growing number of cancellations, CNBC reports. Prospective buyers burdened by soaring interest rates and high inflation are putting their dreams of homeownership on hold, and a slowing market is also giving buyers more time to make purchases and more room to negotiate.
The share of sale agreements canceled for existing home purchases in June was just below 15% of all homes that went under contract. As interest rates creep higher, some borrowers will no longer qualify for the loans they want, and many may choose to wait for rates to drop back down to more stable levels.
Homebuilders are also seeing higher cancelation rates. Even before the sharpest increase in rates in June, cancelations in May jumped to 9.3% in a survey of builders by John Burns Real Estate Consulting. That compares with 6.6% in May 2021.
“Buyer’s remorse and cancelations shortly after contract are increasing. Builders state buyers are nervous about a potential recession, struggling to get comfortable with higher payments, or expecting home prices to decline,” said Jody Kahn, senior vice president at JBREC. Kahn also noted that in her mid-June survey she continued to see cancelations on the rise.
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