Home Sales Stall as Rising Mortgage Rates and Prices Prompt Cancellations
Across the United States, a growing number of prospective homebuyers are backing out of real estate deals, signaling a significant slowdown in the housing market. The trend, observed as of September 3, 2025, is driven by a combination of persistently high mortgage rates and stubbornly elevated home prices, creating an affordability crisis for many.
This surge in deal cancellations impacts not only individuals seeking to purchase homes but also the broader economy, perhaps dampening construction activity and related industries. The National Association of Realtors (NAR) reports that approximately 3.8% of pending contracts were terminated in July 2024, the highest level sence the early days of the pandemic. This figure represents a ample increase from the 2.5% recorded in June 2024 and underscores the escalating challenges facing the housing sector. Experts predict continued volatility in the coming months as the Federal Reserve navigates its monetary policy and housing inventory remains constrained.
The primary culprit is the rapid increase in mortgage rates. After hovering near historic lows in 2020 and 2021, rates have climbed sharply, reaching levels not seen in over two decades.as of September 3, 2025, the average rate for a 30-year fixed mortgage stands at 7.8%, significantly impacting monthly payments and reducing buyer purchasing power. Simultaneously, home prices, while showing signs of moderation in some areas, remain well above pre-pandemic levels, further exacerbating the affordability gap.
Redfin data reveals that 14.4% of homes listed for sale in August 2024 had price reductions, a clear indication that sellers are beginning to adjust to the changing market dynamics. However, even with price cuts, many potential buyers are hesitant to proceed, opting to wait for more favorable conditions. The cancellation rate is especially pronounced in previously hot markets like Phoenix,Las Vegas,and Boise,where prices experienced dramatic increases during the pandemic-fueled housing boom.
