A new report from Redfin suggests another way higher mortgage interest rates are taking their toll on the housing market: more homebuyers bailing on purchases.
The share of home-purchase agreements that fell through last month rose to 14.9 percent, up from 12.7 percent in May and 11.2 percent in June 2021. It’s also the highest share since early 2017, with the exception of a two-month spike when the housing market sized up at the start of the pandemic. Over 60,000 homes fell out of contract nationwide in June.
The increase doesn’t necessarily reflect homes that went under agreement in June, Redfin researchers noted, but they did pin the blame on rising mortgage rates and a slight increase in buyer power that’s leading some to keep inspection and appraisal contingencies instead of waiving them.
“If rates were at 5 percent when you made an offer, but reached 5.8 percent 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,” Redfin Deputy Chief Economist Taylor Marr said in a statement.
In the New Haven area, 14.8 percent of home sales contracts fell through last month, compared to 13.3 percent in Fairfield County and 12.5 percent in Greater Hartford.
Redfin did not report how these rates compared to previous years. However, both markets compare very favorably to dozens of Sun Belt communities and even other northern cities.
Las Vegas (27.2 percent of pending sales) led the nation in share of pending sales falling out of contract, followed by Florida’s Lakeland (26.7 percent), Cape Coral (25.7 percent), Port St. Lucie (25.7 percent) and Jacksonville (25.3 percent) metros.
Other major metros where at least 20 percent of June’s pending sales fell out of contract include: Phoenix, New Orleans, Tampa, Houston, Atlanta and Miami.
Metros where between 15 percent and 20 percent of June’s pending sales fell out of contract included: Dallas, San Diego, Denver, Los Angeles and Austin.
Metros that saw a lower share of homes fall out of contract last month than any of Connecticut’s three biggest metros included: Boston, Minneapolis, New York City, San Francisco and Washington, D.C.