The Sun Belt—the southern swath of the U.S. between Florida and California—has been a prime beneficiary of the Covid-19 migration from high-cost coastal areas. But with the market slowing due to rising interest rates and economic uncertainty, cities in the Sun Belt are cooling more quickly than other U.S. markets, according to a report Monday from Redfin.
Nationally, deals for 15.2% of homes that went under contract in August fell through, approximately 64,000 homes, the data showed. That’s a nominal decline from the previous month, when 15.5% home-purchase agreements were canceled.
“The percentage has now hovered around 15% for the past three months—the highest level on record with the exception of March and April 2020, when the onset of the coronavirus pandemic brought the housing market to a near standstill,” according to the report, which has tracked the data since 2017. “Before the pandemic, it was consistently around 12%.”
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However, cities that saw the biggest growth over the last two-and-a-half years are now seeing some of the largest number of called-off deals.
The biggest number of canceled contracts was in Jacksonville, Florida, where would-be buyers backed away from about 800 contracts in August, 26.1% of last month’s deals in the area, the figures show.
In Las Vegas, 23% of deals were called off in August, followed by Atlanta (22.6%), according to the report. Orlando, Florida, took fourth spot on the ranking with 21.9% of deals not coming to fruition, while Fort Lauderdale, Florida, saw 21.7% of congrats canceled.
Rounding out the top 10 were Phoenix (21.6%), Tampa, Florida (21.5%), Fort Worth, Texas (21.5%), San Antonio (21.1%) and Houston (20.6%).
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“House hunters today are taking their time and exploring their options, whereas six months ago, they had to act quickly and pull out every stop to compete because homes were selling almost immediately,” Tzahi Arbeli, a Redfin real estate agent in Las Vegas, said in the report. “Home buyers now will agree to buy a house and be doing the inspection, and then back out because they found another home they love more.”
On the flip side, the areas with the fewest unsuccessful contracts were in those coastal regions so many people fled during the pandemic.
The lowest percentage of called-off contracts was in Newark, New Jersey—2.7%, according to the report. San Francisco saw the second fewest, 4.2%, followed by Nassau County, New York—which is part of Long Island—with 6.1% and New York City, 7%.
