OHIO — Interest rates have had a big impact on the housing market as buyers continue to wait for lower rates and prices.

What You Need To Know

  • The Federal Reserve didn't raise interest rates after its September meeting 
  • Interest rates are around 7.04% for an average 30-year fixed rate
  • Nearly 60,000 home purchase agreements were canceled in August

  • Buyers are experiencing "cold feet" due to high rates, high home prices and lack of inventory 

This year has been a volatile year for interest rates. Experts have seen numbers that they haven’t seen in decades.

In August, nearly 60,000 home purchase agreements were canceled, which is over 15% of homes that were in contract. The average fixed rate in August was around 7.07%. The month saw a high of 7.23% which is the highest seen since 2001. 

Rates mixed with home prices has caused many home buyers to second guess their option and ability to afford a home. This can lead to “cold feet” or an increase in canceled contracts.

Desalen Golla, a real estate agent with Coldwell Banking Realty, said that it’s important that buyers adjust their budget to current interest rates.

“Buying a home doesn’t have to be scary. Talk with a financial planner early and determine what your budget is like, what your highest budget is, and just find out. Get pre-approved and then you find out what you can buy at the high end, but also do it backwards. Figure out what you feel comfortable in paying and when you do that, you will not experience what we just saw in the month of August," Golla said.

Along with a budget and good financial planning, Golla suggests that home buyers look into new builds. Due to the inconsistent market, many builders are providing incentives like paying closing costs or fees.

“Builders are running a special where you can actually get an incentive for buying one of their inventory homes,” said Golla. “This is where they built a great house, it was either in contract and fell out of contract, and now they have to sell it. So they're actually giving you money that you can use toward your closing costs or to buy down your rate. So that's one option that you can help yourself”

It's expected that interest rates will live between 6% to 7% for the next coming months. The Federal Reserve said inflation and the job market will be the determining factors if another interest hike is needed before the end of the year.