Report: In July, 12% of home sales in Boston fell through
The likely culprit: rising interest rates. The journey from accepted bid to closing day can take to two months or more, and interest rates sometimes shift.
When pandemic lockdowns hit the real estate industry, showings were halted, homes were yanked off the market, and municipal offices that process closing documents were shuttered. As a result, in March 2020, nearly 18% of purchase contracts in the United States were canceled — though it only only a few months to return to typical levels.
But in 2022, the frequency of canceled deals has begun to rise again, reaching 16.1% in July — the highest rate since the pandemic peak, according to a recent report by Redfin, representing about 60,000 failed home sales across the nation.
The likely culprit: rising mortgage interest rates. The journey from accepted bid to closing day can take to two months or more, and interest rates sometimes shift in the interim. Buyers can lock in rates for certain periods of time, but not all do, and even a small increase can stretch monthly payments out of range and kill a deal. And this year’s rate increases were substantial. Consider, for example, that the average rate for a 30-year, fixed-rate mortgage rose from 3.79% in January to 5.3% in July. That change would increase a monthly payment by about $90 for every $100,000 borrowed.
The locations where the highest percentage of deals fell through in July — many in the South and Southwest — are some of the most popular for buyers. In Las Vegas, just over 27% of deals collapsed in June, the highest rate among all markets, according to Redfin. Favored destinations in Florida followed, including Lakeland, just under 27%, and Cape Coral, just under 26%.
In Boston, the cancellation rate was 12% in Boston, 13.4% in Worcester, and 13.8% in Providence.
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