The contracts signed to buy existing houses, called pending sales, were lower in July compared to June and were canceled at the highest rate since at least 2017.
The monthly house sales index awaiting the National Association of Realtors fell 0.4% in July compared to June, but was still 0.7% higher compared to July of last year.
Mortgage rates in July increased slightly, which could explain part of the decline. The average rate on the 30 -year -old fixed mortgage started in July at 6.67%in July, then increased to 6.85%by the middle of the month and ended in July to 6.75%, according to Dr. News. The rate dropped more strongly in August and is now 6.51%.
“Even with modest improvements in mortgage rates, the affordability of housing and stocks, buyers remain hesitant,” said Lawrence Yun, chief economist of NAR. “The purchase of a house is often the most expensive purchase that people will make in their lives. This means that going under contract is not a decision that house buyers take quickly.”
Not only are sales lower, but buyers cancel these contracts at a quick pace. Redfin, a real estate brokerage house, noted that 15% of the contracts were canceled in July, the highest rate since it started to follow metric in 2017. This is based on a redfin analysis of data awaiting MLS, a national announcement database.
The report revealed the most widespread cancellations in Texas and Florida, citing rates specifically high in San Antonio (22.7%), Fort Lauderdale (21.3%) and Tampa (19.5%).
Redfin agents cited the “cold feet” as the main reason why buyers are retreating, according to the report. This follows the global uncertainty that consumers feel about the current state of the economy.
A NAR survey of real estate agents revealed that only 16% said he expected an increase in buyers’ traffic over the next 3 months.
Regional July sales in July fell from month to month in the Northeast and Midwest, were stable in the South and increased to the west.
“It was a” cruel summer “overall: buyers remain pressed by the challenges of affordability while the sellers have been slow to adjust expectations, leaving the housing market stuck in neutral,” said Realtor.com’s main economist Jake Krimmel. “Mortgage rates also offered little relief in July.”