More and more housing deals are falling apart

When the pandemic blockade hit the real estate industry, showings were suspended, housing was withdrawn from the market, and the city hall, which handles final deeds, was shut down. As a result, nearly 18% of purchase contracts in the United States were canceled in March 2020.

However, according to a recent Redfin report, which cited about 60,000 failed home sales nationwide, the cancellation rate began rising again in 2022, reaching nearly 15 percent in June. This is the highest rate since the peak of the pandemic.

A powerful reason is rising mortgage interest rates. The path from an accepted application to a deadline can take more than two months, and interest rates can fluctuate between the two. Buyers can lock in rates for a period of time, but not everyone does, and even small increases can cause the monthly payment to fall out of range and stop trading. And this year’s fee increases have been significant. For example, suppose the average interest rate on a 30-year fixed-rate mortgage rose from 3.79% in January to 5.3% in July. That change would increase your monthly payment by about $90 for every $100,000 you borrow.

The regions with the highest percentage of deals in June (many in the South and Southwest) are among the most popular with buyers. According to Redfin, Las Vegas saw just over 27 percent of deals fall last June, the highest of the entire market. Florida’s preferred destinations followed, with Lakeland at just under 27% and Cape Coral at just under 26%.