Other real estate offers fail

When the pandemic closings hit the real estate sector, showings were halted, homes were taken off the market and municipal offices that ...

When the pandemic closings hit the real estate sector, showings were halted, homes were taken off the market and municipal offices that process closing documents were closed. As a result, in March 2020, almost 18% of purchase contracts in the United States were canceled – although it took only a few months to return to normal levels.

But in 2022, the frequency of canceled transactions started to rise again, reaching almost 15% in June – the highest rate since the peak of the pandemic, according to a recent report by red finwhich represents approximately 60,000 failed home sales across the country.

The likely culprit: rising mortgage interest rates. The journey between the accepted offer and the closing day can take up to two months or more, and interest rates sometimes change in the meantime. Buyers can lock in rates for certain periods, but not all do, and even a small increase can stretch monthly payments out of reach and kill a deal. And the rate increases this year have been substantial. Consider, for example, that the average rate for a 30-year fixed rate mortgage rose from 3.79% in January to 5.3% in July. This change would increase a monthly payment approximately $90 for every $100,000 borrowed.

The places with the highest percentage of deals failed in June – including many in the south and southwest – are among the most popular with buyers. In Las Vegas, just over 27% of trades failed in June, the highest rate of any market, according to Redfin. Preferred Florida destinations followed, including Lakeland, Florida at just under 27% and Cape Coral, Florida at just under 26%.

This week’s chart shows the US metropolitan markets where the highest share of trades failed in June.

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Newsrust - US Top News: Other real estate offers fail
Other real estate offers fail
Newsrust - US Top News
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