Real Estate market in the USA is seeing a record number of homebuyer cancellations. According to recent data, nearly 60,000 purchase agreements were called off in July alone. This trend reflects a larger issue in the housing market, where sales of existing homes also dropped by 2% compared to last year. The high cancellation rate is due to several factors. Housing costs are very high, causing potential buyers to hesitate. Economic uncertainty and fears of a recession are making people more cautious. As a result, pending sales of both existing and new homes dropped to their lowest levels.
According to recent reports, there’s been a noticeable increase in real estate investing deal cancellations in recent months. For instance, according to real estate broker, nearly 56,000 home purchase agreements were canceled in June, which is 14.9% of all homes under contract that month—the highest ever for June. This is largely due to high housing costs, with the median home price hitting a record $442,525 and a 30-year mortgage rate of 6.92%. Some areas in the USA see particularly high cancellation rates, which may compel sellers and real estate agent with real estate license to lower their prices.
However, the mortgage rates have slightly decreased recently, but they are still above 6%. There’s speculation that the Federal Reserve might start lowering interest rates in September and keep reducing them through 2025. But, the market already expects these cuts to happen quickly.
From the 1970s to 2024, mortgage rates have experienced significant fluctuations. In the early 1980s, rates surged to about 16% but fell dramatically to just under 3% by 2021. As of 2024, rates fluctuated between 6.5% and 7%, reflecting recent economic conditions and Federal Reserve policies. The modern 30-year fixed-rate mortgage, which began in the 1930s, has been influenced by various economic factors, including inflation, housing market crises, and central bank interventions. Historically, lower rates boost homebuying and refinancing opportunities, while higher rates can increase monthly payments and impact affordability. Staying informed and adaptable will be crucial as market conditions continue to change.