The rate of home sale cancellations reached a record of 15%, the highest rate since the beginning of the COVID-19 pandemic. This rate of cancellations is the result of buyers reconsidering their purchases due to changes in the market, which have caused them to back out on their existing real estate transactions. As a result, sellers are left with an unsold home, contributing to a housing market that has begun to cool.
What Are Home Sale Cancellations?
When someone says a home sale has been canceled, they are referring to any situation where an agreement to sell a home was already signed, but the real estate transaction had not yet closed. In effect, this means that one or both parties has decided they do not want to go forward with the sale. In this case, it is usually the buyer choosing to cancel the purchase, as a result of market conditions making these purchases increasingly unfavorable.
What Are the Statistics Behind the Home Sale Cancellations?
The rate of home sale cancellations increased by 15% in June, the highest they have been since the beginning of 2020, when the COVID-19 pandemic temporarily paused all home sales. This is compared to a rate of 11% from the same time period last year. Home builders are in a similar situation, with a record 9.3% cancellation rate on contracts to build homes in May.
Why Are Home Sales Being Canceled?
The large number of home sale cancellations is generally attributed to three primary factors. First, rising inflation has driven up the price of housing to a level that is unaffordable to many people. Second, this is coupled with rising interest rates, which are making it more expensive to borrow money, including increasing payments on mortgages. This, combined with a housing market that has begun to cool, has led many people who signed real estate contracts at the height of the market to start reconsidering their purchases.
How Does This Affect the Market?
The number of home sale cancellations is likely to spur the market to cool even further. This is because sellers must relist their homes on the market, further increasing the amount of available inventory and driving prices down. It also means that some buyers will need to accept a far lower amount of money than they previously would have gotten for their homes, in some cases just a few weeks prior.
At Liongate Homebuyers, we assist our clients with a variety of services related to buying and selling real estate, including purchasing homes for cash. We have experience handling real estate financing, especially for developers and house flippers. If you are interested in selling your home for cash, please contact us at 516-548-6553, or visit our contact page.
