Valley homebuilders see alarming surge in homebuyers backing out of new home contracts

Posted at 8:35 AM, Aug 01, 2022
and last updated 2022-08-01 11:35:35-04

Homebuilders in metro Phoenix face an alarming surge in contract cancellations at a time when economists are pointing to another recession.

Through the middle of July, the cancellation rate was in the 30% range, up from 8-10% in 2020 and 2021, and up from 15% in 2018 and 2019, said Steven Hensley, advisory manager for Zonda housing market research firm.

"Phoenix builders have experienced a noticeable uptick in cancellations in recent months and are presently near levels experienced during the onset of the pandemic and nearly double pre-pandemic levels," Hensley said.

Cancellations in May and June mainly were a result of affordability and qualification issues, he said.

"The rapid rise in interest rates simply priced some homebuyers out of the market," he said.

Read more of this story from the Business Journal.