In another sign that the housing market is cooling, nearly 15% of home sales fell through last month, according to a new analysis from Redfin – the highest that number’s been since the early days of the pandemic.
The housing market has been so frenzied for the last couple of years, that it became common for prospective buyers to waive things like home inspections.
But Moira Holley, a broker in Seattle said now mortgage rates are up and fewer people are looking so, “inspections are back. And in some cases … financing contingencies” – which let a buyer pull out of a sale if they can’t get a loan.
Daryl Fairweather at Redfin said more buyers had financing contingencies in June than in January.
“And that means that if the mortgage rate went up, they could go to the seller and say, ‘I can’t afford this home’ … and they will be let out without penalty,” she said.
She said that’s likely a big part of the reason more sales fell through last month.
Ali Wolf at housing data and consultancy firm Zonda said some especially hot markets in the Mountain West, Southeast and Southwest are cooling the fastest.
“What we’re seeing in some of these markets is consumers do, in fact, have a price ceiling,” she said.
Now that record home prices are colliding with higher mortgage rates, a lot of would-be buyers have hit that ceiling.