More deals for homes are getting left out to dry in the Sun Belt than anywhere else in the United States.
Some of the pandemic’s hottest housing markets counted the highest rates of home purchase cancellations last month, according to Redfin. The southern region fell on the higher side above the nationwide rate of 15.2 percent in August, as buyers think twice about the same destinations that shot to popularity among remote workers seeking more space and warmer weather.
Jacksonville saw the most contract cancellations last month. In the Florida city, 26.1 percent of deals that went under contract last month were called off. The report notes that contracts didn’t need to be signed in August for them to count towards the share.
Among the other top 50 metros in the nation, cities ranked in the top ten with cancellation rates above 20 percent included Orlando, Fort Lauderdale, Tampa, Fort Worth, San Antonio and Houston.
Meanwhile, coastal cities saw fewer cancellations as workers settled into whatever employment reality they found themselves in, including potential office returns. Newark boasted the smallest cancellation rate at 2.7 percent. Other metros with cancellation rates below 10 percent included San Francisco, Nassau County on Long Island, New York City, San Jose and Oakland.
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Deal or no deal? Home buyers increasingly canceling contracts
Overall, the cancellation rate was roughly in line with the past few months. About 64,000 purchases fell through in August, fairly in line with July’s revised rate of 15.5 percent. According to Redfin, the pre-pandemic rate hovered around 12 percent.
“House hunters today are taking their time and exploring their options, whereas six months ago, they had to act quickly and pull out every stop to compete because homes were selling almost immediately,” said Redfin agent Tzahi Arbeli.
With competition across the country easing, prospective homebuyers are able to conduct inspections they were waiving at the height of the market. Other contingencies around financing and appraisals are falling by the wayside as well.
The gain in mortgage rates may also be fueling home purchase cancellations. While buyers lock in rates when they go under contract, pre-approved buyers may have been under the impression they were getting a lesser rate, creating a potential cause for cancellation down the line.