Where fewer sellers List of their homesAnd the Mortgage rates exceeded 7% and The housing market slows to a crawlthe confidence of brokers has plummeted, according to the latest survey by National Association of Realtors.
Of the 2,784 respondents, only 11% said they expect Annual increase in buyer traffic in the next three months, which remained steady from July, but decreased significantly from the 31% recorded in August 2021. Similarly, only 12% of respondents said they expect an annual increase in seller traffic in the next three months, down from 14% in July and 25% the year before.
The report also found that homes for sale received an average of 2.8 offers, down from 3.4 offers in June 2022. This decrease is in line with Recent data from Redfin, which found that only 44.6% of offers written by Redfin agents faced competition in August. According to Redfin, this is the lowest bidding war rate since the start of the pandemic.
In addition to sliding homebuyer competition, the number Pending home sales are canceled also increased. Nationwide, nearly 64,000 home purchase agreements were signed during August, equal to 15.2% of homes contracted that month, According to Redfin. By comparison, the rate was 12.1% a year ago. Redfin notes that the percentage of deals that failed has hovered around 15% over the past three months, the highest recorded excluding March and April 2020 at the start of the COVID-19 pandemic.
Similarly, home builders have reported an increased number of cancellations, particularly in the Sun Belt area.
The increased cost of financing allows buyers to back out of deals because they often do not need to waive contract contingency in order to compete. Additionally, Redfin notes that some buyers may be backing out of contracts as they wait to see if home prices will fall, as mortgage rates have risen to their highest level since 2008, significantly hampering buyers’ purchasing power.
“Home hunters today are taking their time and exploring their options, whereas six months ago, they had to act fast and pull out of every stop to compete because homes were selling almost immediately” with the current situation, said Tsahi Arbel, a Redfin agent in Las Vegas. “Homebuyers now will agree to buy a home and do an inspection, and then hold back because they’ve found another home they like more.”
Sam Schott, a Redfin agent in Miami added: “Some homebuyers are finding that by the time they come under contract and establish their mortgage rates, the rates can be much higher than when they toured the home and/or got pre-approved. This could lead to the termination of the deal because the buyer is no longer financially comfortable with the purchase.”
Homebuyers were more likely to hold back on deals in sun belt citieswhich was a popular home-buying destination during the height of the pandemic.
In August, nearly 800 contracts were canceled in Jacksonville, Florida, equal to 26.1% of homes agreed that month. The top ten were rounded out by Las Vegas (23%), Atlanta (22.6%), Orlando (21.9%), Fort Lauderdale, Florida (21.7%), Phoenix (21.6%), Tampa, Florida (21.5%), Fort Worth, Texas (21.5%), San Antonio (21.1%), and Houston (20.6%).
Las Vegas, Phoenix, Tampa, and San Antonio ranked first on Redfin immigration destinationsWhile Jacksonville, Las Vegas, Orlando, Phoenix, and Tampa are among the fastest-cooling housing markets in the country, according to Redfin. Additionally, San Antonio, Tampa, and Phoenix currently have some of the lowest rates of homebuyer competition in the country.
On the other end of the spectrum, metro areas with the lowest percentage of deal cancellations included Newark and New Jersey (2.7%), San Francisco (4.2%), Nassau County, New York (6.1%) and New York (7%). ), Montgomery County, Pennsylvania (7.6%), San Jose, California (8.2%), Milwaukee (8.9%), Oakland, California (9.2%), Boston (10.1%), and Seattle (10.3%).
With the exceptions of Montgomery County and Milwaukee, Redfin reported that all of these metro areas saw some of the largest net inflows of potential homebuyers in July and August.