House purchase cancellations hit 8 years high
Analysts point to high house prices, increased mortgage interest and economic uncertainty as important reasons why deals collapse.
With more houses on the market than in recent years, buyers also have greater leverage and sometimes walk away during inspections when they find a better option or find problems that they do not want to tackle.
Cleveland Makelaar Bonnie Phillips said that cancellations are especially common with buyers who use Federal Housing Administration (FHA) and US Department of Veterans Affairs (VA) Loans.
“I recently had an older first buyer cold feet the week before the deal had to close,” she said. “It was a beautiful house, we got it for the price she wanted and there were no problems in the inspection, but her neighbors convinced her that property is too much hassle and should rent instead.”
Regional differences
San Antonio saw most of the failed deals in July, with 22.7% of the canceled agreements.
Fort Lauderdale, Florida (21.3%); Jacksonville (19.9%); Atlanta (19.7%); and Tampa (19.5%) followed. Redfin’s analysis included the 50 most populated metro lines – including 44 with sufficient data.
Texas and Florida-de Best States in the country for the construction of new home-having also some of the highest cancellation percentages. In Florida, concern about natural disasters, together with rising insurance premiums and fees for homeowners, pushing some buyers away.
On the other hand, contracts were the least likely in Nassau County, New York (5.1%); Montgomery County, Pennsylvania (8.2%); Milwaukee (8.3%); New York City (9.5%); and Seattle (10.2%).
Biggest shifts on an annual basis
Virginia Beach, Virginia, registered the largest annual increase in the cancellation percentage, with 16.1% of the deals canceled in July, an increase of 12.5% a year earlier.
Newark, New Jersey (+3.3 percentage points); Baltimore (+3 points); San Antonio (+2.8 points); And Houston (+2.8 points) also saw remarkable jumps. Virginia Beach has most of the VA loan holders under large subways, with Baltimore right behind.
In the meantime, canels in 11 subways fell. Phoenix saw the greatest decline (-2.4 points), followed by Orlando (-1.4); Tampa (-1.3); Sacramento, California (-1.3); and Philadelphia (-1.2).
Redfin also noted that the mortgage interest rate has begun to relieve and that the housing stock is lower, the circumstances that some buyers can turn back into the market and are less inclined to go back from contracts.
