U.S. pending home sales decline as contract cancellations rise

U.S. pending home sales continued to decline in July, driven by high mortgage rates and affordability concerns. According to the National Association of Realtors, pending sales fell 2.3% month-over-month and 2.2% year-over-year. The West region experienced the most significant decline, with a 4.7% month-over-month drop, while the Midwest was the only region to see a year-over-year increase of 1.7%.

Simultaneously, home-sale cancellations reached a nearly three-year high in July. Data from Redfin indicates that 14% of home-sale agreements that went under contract nationwide fell through. This rise in cancellations is attributed to a shift in market power toward buyers, as the number of homebuyers dropped to a record low in July, leaving approximately 51% more sellers than buyers in the market. Buyers are increasingly using inspections as leverage or withdrawing from deals due to anxiety over mortgage payments and overall affordability.