A new report says that a high number of people who were going to buy a home back out of deals in July, even though mortgage rates were going down.
Real estate brokerage Redfin RDFN 8.56% said on Monday that about 59,000 home-purchase deals were canceled in July. That’s about 16% of the homes that were put under contract that month.
As far back as the company started keeping track of cancellations in 2017, that’s the most of any July ever.
The most cancellations happened in places where builders have been very busy, and the number of new homes for sale has gone up a lot. Tampa, Florida; Fort Lauderdale, Florida; and San Antonio, Texas, had the most cancelled home-buying plans. Redfin said.
Sellers have had to lower the prices of their homes because buyers aren’t interested and there are too many homes on the market in some areas. As of July, Redfin said there were almost 14% more houses for sale than at the same time last year.
The number of homes for sale went up, so more than 26% of homes offered on Zillow Z -0.70% had their prices lowered in July. This was the highest percentage for that month since records began in 2018.
And that’s good news for people who want to buy a house. Since there are more homes on the market, buyers have more room to negotiate not only on prices but also on real estate agent fees.
Redfin says that high home prices and political unpredictability are two reasons why many people are choosing to stay away from the market, even though mortgage rates are going down.
The prices of homes are still very high. A study by the company found that the average 30-year mortgage rate was 6.5% as of August 15. This means that the monthly payment for a median-priced $390,000 home would be about $2,600. But house prices are 4.1% higher now than they were a year ago.
People who are buying things are also worried about the upcoming presidential race. Nicole Stewart, a Redfin real estate agent in Boise, Idaho, is said to have said, “When rates finally dropped, buyers got excited, and we saw more activity.” She also said that “a lot of people are also worried about the political climate.”
In a Redfin blog post, the Boise agent said that these buyers can afford to buy a home, but they’re “holding off because it’s unclear where the country will be in six months.”
There’s no doubt that presidential elections don’t have a direct effect on the housing market. “Elections for president have had little effect on home prices,” Amy Lessinger, head of the real estate company Re/Max, told MarketWatch. She did say, though, that home sales have generally slowed down before presidential elections.
After nine of the last eleven presidential elections, home sales went up the next year. “That’s because you see people wait and ask, ‘What’s going to happen?'” Lessinger explained.
“So [sales] might slow down before the election,” she said, “but they usually pick up the year after.”
