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Pending home sales in the Portland metropolitan area in June fell through at the fastest rate since the start of the pandemic in 2020, further evidence that the real estate market is quickly cooling.
Some 8 percent of pending home sales contracts in the Portland area fell through in June, less than the national average of 15 percent and less than the highest in New England, 14.8 percent in the New Haven, Connecticut, metropolitan area, according to new data from online real estate marketplace Redfin. The contracts on those homes, however, could have been agreed upon before June.
The news comes on the heels of other data from Redfin showing 7.1 percent of its 852 active listings have had price drops in the Portland area from May 30 to June 26 compared with the same four weeks last year. The number of active listings was down 29 percent in the four weeks compared with last year.
The canceled sales, along with fewer multiple offers and fewer home showings, are giving buyers more room to negotiate. That includes asking for inspections, which have been off the bargaining table the past couple years as buyers gave up concessions to better compete for a home.
“It’s still a seller’s market, but there is more room for negotiation,” Jeff Mateja, an agent at Keller Williams Realty, said.
Mateja still is seeing multiple offers on homes, but instead of the 15 or more six months ago, there now are three or four. But that is still a lot should a pending offer fall through. He noticed the housing market cooling with the start of the war in Ukraine at the end of March, when more uncertainty about the world economy set in.
Some reasons sales fall through include buyers feeling remorse after rushing into a home purchase and rising mortgage rates causing homes to no longer be affordable.
“Buyers are increasingly keeping rather than waiving inspection and appraisal contingencies,” Taylor Marr, deputy chief economist for Redfin, said. “That gives them the flexibility to call the deal off if issues arise during the homebuying process.”
In Cape Elizabeth, two houses came back onto the market last week after prospective buyers backed out when they discovered problems during inspections, real estate agent Bethany Angle, owner of Angle Associates, said.
“They probably got cold feet,” she said. “It’s a really tough market.”
Angle also has noticed that real estate brokers are advertising more as the market cools.
It’s not always the buyer who walks away from the deal. Some sellers are listing their homes simply to test the waters and see how they will do, Brian Wood, a broker at Coldwell Banker in Portland, said.
He has noticed more homes coming onto the market for sale, though, with sellers more confident they can find another home for themselves.
“The market went from white hot to hot,” he said.
Buyer activity is down across all sectors of the real estate market, Erin Oldham, associate broker at Portside Real Estate Group, said. Showings on condominiums in Portland are down from 10.6 per condo on the market in February to 6.8 average showings in June. Showings on homes in Portland decreased from 20.3 in February to nine per home in June.
Oldham said showing activity is an indicator of the current housing market, whereas data on home sales is about 45 days behind because that is how long it takes to close on a home.
“We are still solidly in a seller’s market, but the trend is towards increasing supply and homes taking a bit longer to sell,” she said.