A record number of American homebuyers appear to be getting cold feet amid concerns with the real estate market.
Nearly 60,000 purchase agreements were canceled in July and sales of existing homes fell by an annual rate of 2%, according to a new Redfin report. Meanwhile, pending sales of both existing homes and new builds dropped to the lowest level on record last month — aside from April 2020 when the pandemic brought the economy to a screeching halt.
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Mortgage rates averaging above 6% are also not helping buyers. While the Federal Reserve is expected to lower interest rates in September — which would in turn lead to lower mortgage rates — Redfin senior economist Elijah de la Campa said waiting around for rates to drop isn't necessarily the best strategy for those looking to buy.
"If you have the means to buy and have been thinking about doing so, now actually might not be a bad time," de la Campa said in a statement. "That’s because mortgage rates have fallen enough to boost your purchasing power, but not enough to bring tons of buyers off of the sidelines and drive up competition."
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Federal data shows that in general, when mortgage rates fall, housing prices go up. But Redfin notes that the supply of homes for sale increased by a record 14% last month, giving buyers more options and negotiating power.
