Mortgage rates remain high, but not high enough to bring down home costs. It’s enough to cause more buyers to back out of purchase contracts than at any point in at least six years.
Nationally, 17% of homes under contract fell through in October, according to Redfin. That’s the highest rate since the real estate platform began tracking the statistic in 2017.
Locally, it’s a different story — despite a median home price that is now almost 50% higher than before the pandemic. In the Philadelphia metro area, only 13.2% of pending deals fell through in October. That was down from 13.4% in September and from 13.5% in October 2022. Philadelphia had purchase contracts fall through at the 14th lowest rate among the country’s 50 most populous metro areas in October, according to Redfin’s analysis.
Montgomery County, which Redfin considers its own metro area, remained red hot, with just 7.7% of home sales falling through in October, giving it the third lowest rate in the country behind only San Francisco (6.1%) and Nassau County, New York (6.6%). That’s a lower rate than last October, when 9.2% of contracts fell through in Montgomery County.
The 17% rate of homes falling out of contract nationally last month was even higher than the brief but drastic surge seen right after the pandemic hit in early 2020. Home-purchase cancellations are highest nationally in Jacksonville, Atlanta, Orlando, Fort Worth and Fort Lauderdale — each with more than a 23% cancellation rate.
“I’m seeing a lot of cold feet,” Eric Auciello, a Redfin sales manager, said in the report. “Home prices are high, mortgage rates are high and insurance costs are high, and when buyers see the final number, a lot of them are backing out.”
Mortgage rates, which were at historic lows of under 3% in 2020 and 2021, are now steadily over 7%. In Greater Philadelphia, that hasn’t curbed demand enough to keep home prices from continuing to rise amid very tight supply. The median sale price of a home in Montgomery County this October was $417,750, a 5.76% increase over the $395,000 median price tag from the same month last year. While housing prices were roughly flat in Philadelphia County year over year, median home prices were up 7.7% in October across the metro area as a whole.
While sale prices continue to jump locally, so are home values. According to a report from Zillow, Greater Philadelphia posted the third-largest increase in aggregate home value in the nation in October, jumping 6.8% compared to last year.
| Rank | Prior Rank | Sale date |
|---|---|---|
|
1 |
1 |
944 Providence Rd. – 03/15/2023 |
|
2 |
2 |
1911 Walnut St. #3901 – 06/15/2023 |
|
3 |
3 |
355 Fairview Rd. – 06/14/2023 |
