Affordability challenges continue to impact buyers as evident in a rising contract cancellation rate.
According to Zillow, the share of contract cancellations increased in August to 2.8 percent, but remains in line with pre-pandemic norms. Put another way, one out of every 36 pending sales fell through last month, compared to about one in every 50 at the beginning of the year, and one out of every 45 at the end of last August.
A greater share of lower priced homes have fallen out of contract than higher priced homes nationally, reflecting affordability challenges as mortgage rates have risen.
Sunbelt cities continue to fell the market cooldown at higher rates as evident by their higher cancellation rates. The only California cities to make the list of highest cancel rates were Sacramento, Los Angeles and Riverside, though all three posted rates below the national average.