As mortgage rates continue to rise and home sales continue to slow, the next leg down of a slowing real estate market has begun—contract cancellations.
The National Association of Home Builders (NAHB) has reported large drops in the traffic of prospective buyers in each of the last eight months. Of the dwindling number of people that have actually signed a sales contract, many are having second thoughts, followed by buyer’s remorse, followed by canceling the contract.
As the chart below shows, the rate of home purchase cancelations in all major markets save for the Northeast is now a multiple of the cancelation rate of a year ago. (Chart from John Burns Real Estate Consulting, LLC)