Texas home buyers are getting cold feet
In DFW, 20% of signed contracts were canceled last month
Texas home buyers are having commitment issues.
Nearly every Texas metro had contract cancellation rates around 20 percent in June — about 5 percent higher than the national average, according to the Dallas Business Journal. Houston saw just under 23 percent of home sales fall through. Austin was seemingly spared from this trend with a cancellation rate of 17.9 percent.
Rising mortgage rates and overall housing costs have sidelined scores of buyers in the Lone Star State, said Kent Lugrand, CEO of Plano-based InTouch Credit Union. He says homebuyers are seeing upwards of $500 tacked on to their monthly mortgage payments.
The suddenness of the recent rise has taken many buyers off guard, coming months after many had signed their contracts, according to Danny Perez of Rockwall-based M&D Real Estate.
“They’re building their house. They went under contract nine months ago. They go to lock it in,” he said. “So now, their interest rates have doubled, so they literally can’t afford the house anymore. They can’t be approved for it.”
And it’s not just buyers that are pulling back. Even as inventory remains low, home builders are tapping the brakes on new housing starts in parts of North Texas — particularly in the northern suburbs of Dallas that have been favorites of big-name developers since the pandemic.
In the first six months of 2022, single-family building permits are down 40 percent in Frisco, 41 percent in Celina, 20 percent in Prosper and 23 percent in Princeton compared to the same period last year when these north Dallas suburbs were topping national lists for their booming markets.
Collin County, which encompasses these Dallas submarkets, has seen a 27 percent increase in the price of new and resale houses, and home costs in the area as a percentage of income are now 60 percent. With a median home price of $403,500 and a median income of $50,681, homes in Collin County are virtually no longer affordable for its current residents.
— Maddy Sperling