Americans backed out of record 59,000 home purchase agreements in July, Redfin says
A record share of Americans backed out of their planned home purchase in July, signaling the deepening home affordability crisis.
According to real estate listing website Redfin, roughly 59,000 home purchase agreements were canceled in July, equal to 15.8% of all homes that went under contract during the month.
This was the largest percentage of any July on record going back to 2017.
By comparison, the percentage of home purchases that were canceled in an average month before the pandemic was around 12%.
Buyers in Florida and Texas were most likely to back out of their purchases at the last minute. More than one in five home purchases fell through in places like Tampa (21.9%), Fort Lauderdale (21.8%), and San Antonio (21.8%).
Redfin real estate agent Nicole Stewart said homebuyers were more likely to back out of deals because they expect mortgage rates to continue dropping.
“When rates finally dropped, buyers got excited, and we saw more activity,” said Stewart. “But now that rates have fallen to the mid-6%-range, people have been waiting to see if they’ll drop even more.”
According to Freddie Mac, the average 30-year mortgage rate is now 6.35%, down from a 2024 peak of 7.22%.
Although interest rates are widely expected to fall, waiting on the sidelines until that happens could be a double-edged sword for homebuyers.
The problem with waiting too long
As Stewart explained, “home prices are going up,” so buyers need to be careful how long they delay their purchases. According to Goldman Sachs, average home prices will likely grow between 3.8% and 4.9% annually over the next three years.
“The combination of modestly higher supply growth and firm demand should result in only a modest increase in the homeowner vacancy rate,” Goldman’s analyst said.
Other experts, like Axos Bank’s John Dustman, believe now could be the best time to buy a home.
In his view, a sharp decline in mortgage rates could encourage more buyers back into the market, increasing demand and straining already razor-thin housing inventories.
As Creditnews reported, the inventory of new homes has been rising steadily this year, but the stock of existing homes has been declining.
What is more troubling is that homes in the more affordable $100,000 to $500,000 price range have the lowest supply, according to the National Association of Home Builders.
Meanwhile, new builds now account for 30% of total housing inventories, despite being only about 12% of the overall market. According to Dustman, “inventory levels have increased but are still at levels equal to about 50-60% of available inventory in 2019.”
Because of this, “Waiting around for mortgage rates to fall further isn’t a surefire strategy,” said Redfin senior economist Elijah de la Campa.
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