Homebuyers are now pulling out of deals at a record rate — why so many ‘queasy’ buyers are canceling contracts

Core Insights - The U.S. housing market is experiencing a significant increase in home purchase agreement cancellations, with 15.3% of agreements falling through in July, equating to approximately 58,000 agreements, marking the highest cancellation rate for July on record [1][2] - High homebuying costs, economic uncertainty, rising inflation, and a slowing labor market are contributing factors to buyers' hesitance in the current market [1][2] Market Conditions - The housing market is slowing down as summer ends, with an impasse between buyers and sellers leading to some sellers withdrawing listings in hopes of better market conditions [2][3] - Mortgage rates are currently averaging about 6.5%, while home prices have surged nearly 50% compared to five years ago, according to the Case-Shiller Home Price Index [3][5] Cost Factors - Higher home prices are accompanied by increased insurance premiums and property taxes, with home insurance premiums rising 57% from 2019 to 2024, and a 14% increase occurring in 2024 alone [4][6] - Property taxes have increased by 12% between 2021 and 2023, further straining potential homebuyers [4][6] Income Requirements - An annual household income of $116,986 is now required to purchase a typical home, representing nearly a 50% increase since early 2020 when the required income was $78,236 [5]