Real estate deals canceled at highest rate in nearly a year as mortgage rates tick up
Tacoma, Washington, saw the biggest drop in closed home sales
How should home buyers respond to 8% mortgage rates?
Compass agent Jason Haber takes a closer look at the decrease in mortgage applications on 'The Claman Countdown.'
Fifty-three thousand real estate deals were canceled last month — the highest rate in nearly a year — as rising borrowing rates continue to scare off buyers, Redfin reported.
In September, 16.3% of home purchase agreements in the U.S. were canceled, according to the technology-powered real estate brokerage.
That marks the highest percentage of canceled contracts since October 2022, when borrowing rates surpassed 7% for the first time in two decades.
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It's up from the 15.2% of purchase agreements that fell through in August and the 15.8% of agreements that fell through a year earlier, according to the data.
A significant number of buyers are backing out of real estate deals in part because of rising borrowing rates. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
While pending home sales have ticked up, the number of closing sales have slumped to significant degree compared to a year earlier.
In September, the number homes going under contract rose 1.3% month over month, reaching its highest level in nearly a year on a seasonally adjusted basis. A year earlier, pending sales were down 12.1%, real estate brokerage Redfin reported. However, the number of closed sales fell 1.5% month over month. Compared to a year ago, they fell 12.8% on a seasonally adjusted basis, Redfin reported.
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The brokerage noted that the dip in closed sales is due in part from the "high portion of buyers backing out of contracts due to rising mortgage rates," Redfin reported.
"Transactions are also falling apart due to skyrocketing insurance premiums and disagreements between buyers and sellers over necessary repairs," Florida-based Redfin Premier agent Heather Kruayai said. "Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close the deal."
While pending home sales have ticked up, the number of closing sales have slumped to significant degree compared to a year earlier. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
Last week, the key U.S. mortgage rate ticked up to 7.63%, its highest level in over two decades, according to mortgage buyer Freddie Mac. Mortgage rates rose past 6% in September 2022, and have remained above that threshold since.
It's a far cry from when rates were 3.22% in January 2022.
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Here are the metros with the biggest drop year over year in closed home sales last month:
Tacoma, Washington: -40.2%
Oxnard, California: - 28.6%
Fresno, California: -28.5