By Naveen Athrappully
Around 56,000 home purchase agreements were called off in August, with deals falling through more frequently due to buyers and sellers unwilling to compromise on their demands, real estate brokerage Redfin said in an Oct. 7 statement.
The cancellations accounted for 15.1 percent of homes that went under contract in August. The 56,000 canceled deals are up by 14.3 percent from a year ago, representing the highest August rate since 2017, the company said.
According to the brokerage, buyers are “skittish and selective” due to an environment of high home prices and rates, as well as economic uncertainty.
Buyers are “asking sellers for all sorts of repairs, price reductions and other concessions because a) it’s expensive to buy a home and b) it’s a buyer’s market, meaning buyers hold the negotiating power,” the company said.
In the second quarter, the median sales price of homes sold in the United States dipped to $410,800, the lowest since Q3 2021, according to data from the Federal Reserve Bank of St. Louis.
Despite this drop, home prices continue to remain far higher compared to the pre-pandemic period. In Q4 2019, the median sales price was $327,100.
“There are roughly 500,000 more sellers than buyers in the market, which empowers buyers to negotiate because they have options,” Redfin said in its statement.
As for sellers, they still believe the market is similar to 2021 and that their homes will sell for a high price, said the brokerage.
Some sellers are facing difficulties in accepting the fact that the current housing market is no longer a seller’s market, the statement said, adding that people who bought properties during the pandemic buying frenzy are unwilling to negotiate since they need to sell them at a certain price to prevent suffering a loss on the transaction.
Among the 443 Redfin real estate agents surveyed who tackled deal cancellations, over 70 percent said inspection or repair issues were the number one reason for the agreements to be called off.
The second common reason was the inability of the buyer to secure financing, followed by buyers facing difficulty in selling their own properties.
‘More Balanced Housing Market’
In a Sept. 30 commentary, Lisa Sturtevant, chief economist at real estate data company Bright MLS, said that while mortgage rates are falling and housing affordability is improving, this is still insufficient to “jump start” sale activity.
“More inventory is key to moderating home prices, as we have seen in some markets in the South and West,” Sturtevant wrote.
“As sellers adjust their price expectations, we should see continued downward pressure on price growth—and even home prices falling in more markets—which will be necessary to move toward a more balanced housing market.”
The average weekly rate on a 30-year fixed-rate mortgage was 6.34 percent for the week ending Oct. 2, lower than the 7.04 percent peak hit in January, according to data from Freddie Mac.
In a Sept. 24 statement, the National Association of Home Builders (NAHB) credited the jump in the sales of newly built single-family homes in August for the dip in mortgage rates.
Easing rates combined with the Federal Reserve’s recent interest rate cut suggest a positive outlook for housing demand, said Jing Fu, NAHB senior director of forecasting and analysis.
“If this momentum continues, we expect new home sales to gain traction as more buyers reenter the market in the final quarter of 2025.”
NAHB chairman Buddy Hughes also said they were expecting a general improvement in sales over the coming months due to the decline in mortgage rates.
