The housing market shows signs of strain because more American homebuyers choose to cancel their purchase deals. The National Association of Realtors reported that pending contracts reached a 6% cancellation rate during May which exceeded the 5% rate from the previous year.
The percentage of cancelled contracts decreased from 7% in April but showed consecutive yearly increases for three months. The Redfin analysis revealed that pending sales in May reached their highest failure rate of at least eight years with 14.6% of all pending deals falling through.
The rising financial difficulties that consumers face explain this recent increase. The combination of employment changes and strict credit requirements and unanticipated expenses and low home appraisal values leads buyers to abandon their purchases. The combination of rising mortgage rates with ongoing economic instability has led to decreased buyer confidence.
NAR Chief Economist Lawrence Yun stated that stock market volatility together with restrained consumer sentiment and broader geopolitical concerns are influencing the market.
The housing market shows declining demand because prices remain high. Real estate agents observe that the highest number of deal breakdowns occurs in areas with competitive pricing and homes that need renovation work.
The recent pattern of cancellations indicates that residential real estate will experience additional market instability because affordability issues and inflation continue to affect household finances.
