The signing agreement to buy an existing home known as a pending sale has weakened in July compared to June and has been cancelled at the highest rate since at least 2017.
The National Association of Realtors’ monthly pending home sales index fell 0.4% between June and July, but was up 0.7% from last July.
Mortgage fees had risen slightly in July, which explains some of the decline. According to Mortgage News Daily, the average rate for the popular 30-year fixed mortgage began at 6.67% in July, moving to 6.85% during the month, ending July at 6.75%. The August rate fell more sharply, and is currently sitting at 6.51%.
“Even with mortgage fees, affordable home prices and slight improvements in stock, buyers still remain weak,” said Lawrence Yun, chief economist at NAR. “In many cases, buying a home is often the most expensive purchase for people in their lives. This means that being under a contract is not a quick decision made by a home buyer.”
Not only does sales fall, but buyers are canceling these contracts at a rapid pace. Real estate brokerage Redfin has found that 15% of contracts were cancelled in July. This is the best rate since I started tracking metrics in 2017. This is based on Redfin analysis of pending sales data from MLS, the national database of lists.
The report found that the most common cancellations in Texas and Florida cite particularly high rates in San Antonio (22.7%), Fort Lauderdale (21.3%) and Tampa (19.5%).
According to the report, Redfin’s agents cited “cold feet” as the main reason for buyers’ support. Tracking consumers with overall uncertainty feel about the current state of the economy.
In a real estate agent’s NAR survey, only 16% said they expect buyer traffic to increase over the next three months.
Regionally, sales in July fell from moon to moon in the northeast and the midwest, flat in the south and rising in the west.
“It was an ‘cruel summer’ overall. Buyers continue to focus on affordable challenges, but sellers have slowed to adjust expectations and the housing market has stuck to neutrals. “Mortgage fees also offered little relief in July.”
