Buyers cancelling home sales at highest rate since beginning of pandemic

A skyrocketing number of home sales are faltering throughout the U.S. housing economy, with experts pointing to slower housing markets and higher mortgage rates as the main drivers of the turnaround. 

Nationwide, "roughly 60,000 home-purchase agreements fell through in June, equal to 14.9% of homes that went under contract that month," real estate company Redfin said in a home sale analysis this week.

Redfin said that that number represents "highest percentage on record with the exception of March and April 2020, when the housing market all but ground to a halt due to the onset of the coronavirus pandemic."

Redfin Deputy Chief Economist Taylor Marr said in the analysis that the slower housing market "is giving homebuyers room to negotiate, which is one reason more of them are backing out of deals."

"Buyers are increasingly keeping rather than waiving inspection and appraisal contingencies. That gives them the flexibility to call the deal off if issues arise during the homebuying process," she said. 

She added that "rising mortgage rates are also forcing some buyers to cancel home purchases. If rates were at 5% when you made an offer, but reached 5.8% by the time the deal was set to close, you may no longer be able to afford that home or you may no longer qualify for a loan.”

The housing market has been white-hot for nearly two years as sharply constricted supply met with a massive increase in customer demand, particularly due to remote working options freeing up many homebuyers from geographic restrictions. 

The Federal Reserve has been boosting interest rates in recent weeks in an effort to quell rising inflation rates, a measure that has led to a marked decrease in home sales as buyers have avoided the higher rates.