Lending markets

Pending sales plummet as property markets start to cool

Changes that have begun to occur in real estate markets across the country have led to more instances of withdrawals from pending home sales, including in Oklahoma City and Tulsa, according to Redfin. (Photo by Dillon Kydd on Unsplash)

More would-be buyers have held back sales or pulled out altogether across the country recently, including in Oklahoma City and Tulsa, as mortgage rates rose and housing shortages began to escalate. mitigate.

Nationally, about 63,000 home purchase deals failed in July, or 16.1% of homes under contract that month, according to data provided by Redfin.

In Oklahoma City, the online brokerage said 22.7% of its pending sales contracts failed that month, and in Tulsa, 17.9%.

Redfin analysts speculated that the rise in interest rates, which sidelined many potential buyers, caused others to rethink ongoing deals. Some may believe that the slowdown in sales will create more favorable options for them and that they will have greater bargaining power to negotiate deals later. Some began stipulating contractual contingencies that would allow them to waive sales without financial penalty if something went wrong. With an increasing number of homes to choose from, they are also more likely to cancel a deal if a seller refuses to lower the selling price of the home or make requested repairs, Redfin said in a statement.

“Homes have been on the market longer, so buyers realize they have more options and more room to negotiate. They ask for repairs, concessions and contingencies, and if sellers say no, they back off and move on because they’re convinced they can find something better,” said Heather Kruayai, a Redfin realtor in Jacksonville, Fla. “Buyers are also nervous because they fear a potential recession will cause house prices to plummet. They don’t want to end up in a situation where they buy a house that’s worth $200,000 less in two years, so some choose to wait in the hope of buy when prices are lower.

Another Redfin agent, Alexis Malin, said that despite the change in leverage, there is no guarantee that buyers will be able to find better deals in the future. Annual house price growth has started to slow – to 8% today from 17% a year ago – but prices continue to rise and economists at Redfin do not expect them to s are collapsing.

“Some buyers who forgo deals think the market is crashing and they can get a home for $100,000 less in six months. That’s not necessarily the case,” Malin said. “Homes in many parts of Florida are still selling for a pretty penny, so I’m warning my buyers that the grass might not be greener on the other side.”

Some buyers may also back off due to mortgage rates above 5%. Those who started their search months ago, when rates were closer to 3%, may find that the type of home they once wanted is now out of their budget.

In Jacksonville, about 800 home purchase contracts were canceled in July, or 29.3% of homes under contract that month, Redfin said. This was the highest percentage among 93 US metropolitan areas analyzed. Next come Las Vegas (27.4%); Lakeland, Florida, (26.2%); New Orleans (25.9%); and San Antonio (25%).

Subways must have had at least 1,000 pending home sales in July to be included.

“Home purchase cancellations may start to decline as sellers get used to a slower-paced market,” said Redfin deputy chief economist Taylor Marr. “Sellers have already started to lower their prices after putting their homes on the market. They will likely start lowering the price of their properties from the start and become more and more open to negotiations.