SEATTLE — The housing market is slowing as higher mortgage rates sideline many prospective homebuyers.
According to Redfin, nationwide, roughly 63,000 home-purchase agreements fell through in July, equal to 16.1% of homes that went under contract that month.
In Washington, Seattle saw 11% of pending sales fall through in July 2022, in Tacoma the percentage of buyers backing out of deals was 17.2%.
"I noticed Tacoma had a higher share of homes falling out than Seattle," Daryl Fairweather, the Chief Economist at Redfin said. "I think Tacoma was the most competitive and when the housing market and interest rates rise, the higher the competitiveness becomes and there is more that can fall."
Data showed that’s the highest percentage on record with the exception of March and April 2020, when the onset of the coronavirus pandemic brought the housing market to a near standstill.
"The only time we saw more people backing out of deals other than this time was right when the pandemic hit," Fairweather said. "They didn’t know what was going to happen, if they could go to work, or if the economy would continue to function.”
Redfin said today’s buyers are more likely to utilize contract contingencies that allow them to back out without financial penalty if something goes wrong. And with an increasing number of homes to choose from, they’re also more likely to call a deal off if a seller refuses to bring the price down or make requested repairs—a situation that has become increasingly common given that sellers are still adjusting to the cooling market.
“As a buyer, I think that you should know that when you negotiate upfront, the buyer and seller are on the same page," she said. "As for sellers, I think that you should be aware that homes are falling out of contract so pay attention to that and those clauses and try to negotiate terms that work for you."