Housing Market Warning: Rising Home Purchase Cancellations Reveal Underlying Economic Strain
Home purchase cancellations are climbing year-over-year, exposing the harsh reality beneath the surface of the housing market’s fragile recovery. High mortgage rates and soaring prices are pricing out everyday Americans.
The latest data on U.S. housing market activities reveal a troubling trend: an increase in canceled home purchase agreements, a glaring warning sign about the state of American homeownership.
According to the National Association of Realtors (NAR), 6% of pending home purchase contracts were canceled in May 2024, slightly down from April’s 7%, but notably up from just 5% in May last year. This marks three consecutive months where annual cancellation rates have increased, highlighting growing instability.
Redfin’s analysis confirms this disturbing picture, with 14.6% of pending sales falling through in May—up from 14% the previous year and the highest cancellation rate for May since at least 2017. These figures expose a market under pressure, contradicting any narrative that all is well in housing.
Why Are More Buyers Backing Out?
The reasons behind these cancellations paint a clear picture of economic challenges hitting American families hard. Many buyers face unexpected financial hurdles: fluctuating stock markets erode wealth; credit conditions tighten; employment uncertainties persist; and appraisals often come back lower than anticipated because inflated prices don’t match real value.
NAR Chief Economist Lawrence Yun pointed to “restrained consumer confidence” and “broader economic and geopolitical uncertainties” as factors driving these elevated cancellation rates—a polite way to highlight that many Americans simply cannot afford their dream homes anymore.
High Mortgage Rates and Soaring Prices Squeeze Buyers
This housing turbulence comes after years of runaway home prices paired with mortgage rates elevated above historic norms. Since early 2022, typical mortgage rates have hovered near or above 7%, pushing monthly payments beyond what average earners can manage without sacrificing essentials.
The result? The slowest pace of previously owned home sales since 2009 persists despite slight month-to-month increases in pending sales. The apparent uptick does not reflect healthier demand but rather pockets of temporary activity amid broader affordability constraints.
What This Means for America’s Future
Pending sales provide a snapshot into future closed transactions, so rising cancellations foreshadow continued weakness ahead. Redfin data shows a sharp drop—2.3% year-over-year—in pending transactions as of late June, marking the steepest slide in three months.
Even Fannie Mae has tempered expectations for existing home sales this year, cutting its forecast from 4.24 million units sold to just over 4.1 million while predicting only modest growth next year if mortgage rates ease somewhat.
A Call for Sensible Solutions
This situation demands honest recognition: current policies have failed to ensure affordable homeownership for working American families. Sky-high interest rates combined with inflated home prices restrict access to one of the most fundamental pillars of the American Dream—owning your own home.
We must advocate for policies rooted in economic freedom—not artificial market manipulation—that promote sustainable growth, reduce regulatory burdens that inflate costs, incentivize construction to expand supply, and restore buyer confidence through stability.
The time has come to confront reality with common-sense conservatism that serves hardworking Americans rather than financial elites or bureaucratic whims.