that started in March — and it signals the beginning of a return to sanity from the boom, with the balance of power shifting back to homebuyers. Prices are likely to cool somewhat.
Sharp rate increases didn't just pump the brakes on the housing market, they drove it into a wall, said Taylor Marr, an economist at Redfin. But he expects the number of cancellations to come down as sellers adjust pricing to the new reality.Typically, the majority of homebuyers enter into pending sales agreements with a contingency that allows them to back out of the deal if, say, the inspection comes back with issues, or something is off in the appraisal.
When the market was booming just a few months ago, a lot of buyers were waiving those contingencies. Those days are pretty much overDeals failing to close in formerly hot metro areas in the Southwest are soaring. In Las Vegas, they were 27%. Several Florida cities are seeing cancellations near 25%, including Lakeland, Cape Coral, Jacksonville and Orlando.That 14.
Those buyers are either walking away or, in some cases, loan underwriters will no longer approve the mortgage, Marr said.is feeling this: Homebuilders are reporting a vastly different buying landscape, with big drops in sales and foot traffic to homes, and an increase in cancellations, according to a June survey of homebuilders from John Burns Real Estate Consulting.
“Quite a dismal traffic and sales climate," says one Phoenix builder quoted in the report. "Cancellations are extremely high.”“Sales have fallen off the cliff. We are selling 1/3 of what we sold in March and April. Buyers have no urgency and are nervous about interest rates and inflation. Constant negative outlooks being reported consistently on the news aren't helping."