Home purchases across the U.S. are getting canceled at the highest rate in almost a year as rising borrowing costs weigh on buyers.
Nearly 60,000 deals to purchase homes fell through in August, according to a report released Friday by Redfin Corp. That's equal to roughly 16% of homes that went under contract last month, the biggest share of cancellations since October.
More buyers and sellers scrapped deals last month as mortgage rates topped 7% for the first time since November. The average for a 30-year, fixed loan has hovered above that point for the past five weeks, data from Freddie Mac show.
"I've seen more homebuyers cancel deals in the last six months than I've seen at any point during my 24 years of working in real estate," Jaime Moore, a Redfin agent, said in the report. "They're getting cold feet."
Despite sluggish sales, prices have continued to rise because buyers in the market are competing for a limited number of homes, Redfin said. The median price climbed 3% in August from a year earlier to $420,846.
"As long as rates remain high, homeowners will be reluctant to sell," said Chen Zhao, Redfin economics research lead. "That lack of homes for sale will keep prices high because it means buyers are duking it out for a limited supply of houses."
