The cancel culture is taking a new turn, at least when it comes to buying a house. To wit, not only are more people cancelling or delaying plans to purchase a new place, more buyers with signed contracts are walking away from their deals.
According to research from Redfin, sales were cancelled at a record rate in July, when 15% of all contracts fell through before reaching the closing table. That’s roughly 58,000 deals that fell through.
Buyers are changing their minds more than usual because high prices, high mortgage rates and economic uncertainty are making them uneasy, Redfin said. But it’s job security that is keeping 44% of American workers from even considering a major purchase like a house or car.
Nearly two in five workers are more concerned about job security now than 6 months ago, an Ipsos survey of 1,142 employed people on behalf of Redfin found. In comparison, one in five are more confident about their job security today.
The fear about losing their jobs is most acute among workers from households earning less than $50,000. Some 57% of those folks are either delaying or canceling major purchases. That’s in comparison to 48% of workers from households earning $50,000-$100,000 and 35% from households earning $100,000 or more.
Chen Zhao, Head of Economics Research at the realty brokerage, said even though unemployment came in at 4.2% in July – “a relatively low level historically” – workers are perceiving the labor market differently.
“Many workers are worried about job security as they watch their companies adjust to this uncertain economy and increasingly look to AI and other new technologies for efficiency gains,” she said. “From a housing perspective, that wariness is keeping some would-be homebuyers on the sidelines.”
Even among the workers who indicated they are confident about their job security, 19% said they were more concerned now than six months ago. At the same time, 30% said they felt more confident.
Nearly a third – 32% – of workers who are concerned about their job security cited their company’s performance as the primary reason. The next most-cited reason for job security concerns was tariffs (17%), followed by the impact of AI (16%).
Another apprehension-causing factor: More than a third – 36% – of the workers surveyed admitted to not having an emergency fund to cover their monthly mortgage or rent payments in the event they face a financial crisis. More than half – 55% -- said they do have an emergency fund.
Higher income households are more likely to have money set aside for emergencies; renters, less likely, pollsters found.
Meanwhile, contract cancellations in July were the highest for that month in records dating to 2017. Cancellations were most prevalent in Florida and Texas, where more houses are being built than anywhere else in the country.
With more houses to choose from, Redfin said, some buyers are backing out because they’re confident they will be able to find a better place. In Florida, some are also getting cold feet because of soaring insurance and HOA fees.
