Homebuyers are backing out of sales deals at record rates

Summary

• In June, new homebuyers canceled 56,000 home purchases that went under contract (15% of new home contracts).
• That was the highest figure for home purchase back outs for any June on record. More home buyers are losing their nerve because of interest rates and record home prices.
• In addition to the 15% of home sales with deal back outs, 20% of homes for sale in June had a price cut— another June record for the housing market this year.

Are American homebuyers feeling the strain of high home prices and interest rates as the Federal Reserve maintains rates at 5.33%?

June's housing market data suggests a potential slowdown in demand for new homes in the U.S. Purchase cancellations have surged, with 20% of homes sold last month experiencing price cuts.

Redfin reports that many sellers are dropping prices as their homes linger on the market in a stagnant environment.

Active listings have increased more this year than any previous year on record. Additionally, U.S. home sales declined by about 1% from the previous month, marking the most significant monthly drop since October.

All-time high home prices lead to record deal backouts

Record-high U.S. median home prices in July likely contributed to deal cancellations and shifts in other economic indicators.

"We’re seeing nightmare scenarios where deals are getting canceled at the last minute for the most minor reasons," said Rafael Corrales, a Redfin Premier agent based in Miami.

"Buyers often back out during the inspection period because they find something they don’t like, but affordability is really the underlying issue," Corrales added.

According to a Reuters report on Wednesday, the median price for existing homes surged 4.1% from a year ago to a record $426,900. While home prices hit an all-time high for the second consecutive month, the momentum is slowing as housing supply notches a four-year high.

What's holding back the buyers? Sky-high home prices, high mortgage rates, and interest rate lock-in are key factors, according to Redfin.

How can you withdraw an offer?

In case you're wondering, "Can you withdraw an offer on a house once it’s accepted?" The answer is yes, it is still possible to withdraw a sales offer, depending on your paperwork and timeline.

According to Rocket Mortgage, a leading home mortgage lender in the U.S., the key is to include that option in your home purchase contract.

"It's possible to back out of a house offer," says Rocket Mortgage. "The key to walking away smoothly is to include contingencies in your home purchase contract."

The company adds, "If you follow the timelines outlined in your home purchase agreement, you can likely walk away without any financial consequences."