Home sales fell at a staggering rate in June

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Approximately 14.9 percent of all home purchase contracts closed in June, the highest rate since the start of the COVID-19 pandemic. Those roughly 60,000 home ownership deals were all previously under contract but were canceled, according to a report released Monday by real estate brokerage Redfin.

Redfin analyzed data from the past three years and found that June’s 14.9 percent cancellation rate was unmatched by March and April 2020, when the pandemic halted the housing market. The rate for May 2022 was 12.7% and the rate for June 2021 was 11.2%.

In comparison, in March 2020 the rate was 17.6% and in April 2020 it was 16.4%.

red fin

While there are many reasons why these deals may fall through, it is likely that rising inflation and mortgage rates have complicated the home buying process for many people. The Federal Reserve has raised interest rates three times this year in an effort to curb inflation. The federal funds rate, which is the interest rate that banks charge each other to borrow and lend, is now in the 1.5% to 1.75% range.

Mortgage rates, which are the percentage of interest a lender pays on a homeowner’s loan, are also on the rise. Fixed 15-year and 30-year mortgage rates have increased since the start of 2022, and even a slight increase in mortgage rates can cost a potential homeowner thousands of dollars.

Correction, 6:56 pm PT: The story initially misstated which month saw the biggest drop in home sales. This sign belongs to March 2020, followed by April 2020 and then June 2022.

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