Mortgage Rates Are Convincing Home Buyers to Back Out of Sales

A near record number of home buyers are backing out of mortgages.

Around 53,000 home purchase agreements were canceled in September, according data from the brokerage and mortgage origination company Redfin. Data for October has not yet been released.

The canceled agreements represent 16.3% of homes that went into contract in September, the highest percentage since September 2022's 18%, Redfin said.

The real estate firm attributed the rise to high mortgage rates, which are convincing homeowners to keep their existing rates, rather than take on a more expensive home loan.

September mortgage rates surpassed 7% for the first time in nearly two decades. Those rates are even higher now, surpassing 8% on Oct. 18.

Redfin doesn’t forecast relief for homebuyers any time soon, as the dwindling number of new home listings keeps home prices high.

The supply of houses is roughly 17% lower than in September 2022, according to Redfin. However, new listings ticked up 1.9% compared with August, which Redfin called a “glimmer of hope.”

In the meantime, “we expect rates to remain high for the foreseeable future,” said Redfin Chief Economist Daryl Fairweather wrote in the report. “But we also expect prices to stay high into next year. Housing supply is so strained that even a small uptick in listings lures buyers off the sidelines, bolstering sales.”