Signed contracts to buy existing homes, known as pending sales, were weaker in July compared with June, and were canceled at the highest rate since at least 2017.

The monthly pending home sales index from the National Association of Realtors dropped 0.4% in July from June, but was still 0.7% higher from July of last year.

Mortgage rates in July were moving slightly higher, which could account for some of the drop. The average rate on the popular 30-year fixed mortgage started July at 6.67% and then moved to 6.85% by the middle of the month and ended July at 6.75%, according to Mortgage News Daily. The rate fell more sharply in August and is now sitting at 6.51%.

“Even with modest improvements in mortgage rates, housing affordability, and inventory, buyers still remain hesitant,” said Lawrence Yun, chief economist for the NAR. “Buying a home is often the most expensive purchase people will make in their lives. This means that going under contract is not a decision homebuyers make quickly.” 

Not only are sales moving lower, but buyers are canceling these contracts at a swift pace. Redfin, a real estate brokerage, found 15% of contracts were canceled in July, the highest rate since it began tracking the metric in 2017. This is based on a Redfin analysis of pending-sales data from MLS, a national database of listings.

The report found cancellations most prevalent in Texas and Florida, citing specifically high rates in San Antonio (22.7%), Fort Lauderdale (21.3%) and Tampa (19.5%).

Redfin agents cited “cold feet” as the primary reason buyers are backing out, according to the report. That tracks with the overall uncertainty consumers are feeling about the current state of the economy.

An NAR survey of Realtors found just 16% said they expect an increase in buyer traffic over the next 3 months.

Regionally July sales dropped month-to-month in the Northeast and Midwest, were flat in the South and rose in the West.

“It’s been a ‘Cruel Summer’ overall: buyers remain squeezed by affordability challenges while sellers have been slow to adjust expectations, leaving the housing market stuck in neutral,” said Realtor.com senior economist Jake Krimmel. “Mortgage rates, too, offered little relief in July.”