The housing market isn't crashing, it has a 'hangover' — and it's why so many buyers are backing out, a Redfin economist explains

The power in the market is changing.

With less buyers competing for homes, sellers are being forced to come down to earth.

The housing market is already changing as sellers adjust their behavior.

Marr said in a statement to Insider that the housing market isn't crashing, but it is feeling the effects of an unsustainable high.

22.4% of the homes that were for sale in June had a price drop, the highest share on record, according to data from Redfin. Mortgage rate hikes have added hundreds of dollars to borrowers' monthly payments. According to researchers, homes are sitting on the market longer and being bid up less than they were earlier in the year.

Some buyers are canceling home purchases due to rising mortgage rates. If rates were at 5% when you made an offer, but reached 5.8% by the time the deal was set to close, you may no longer be able to afford that home or you may no longer qualify for a loan.

Demand is not collapsing. Buyers are competing for a limited amount of housing inventory. The national median home price has reached a new all-time high of more than $400,000.

Although housing affordability is on the decline, buyers are still using more than $3.2 trillion in home equity, and those that can afford to compete are becoming more cautious. In June, 14.9% of homes that went under contract fell through because of buyer apprehension. June's reading was the highest since records began.

One reason more of them are backing out of deals is the fact that the housing market is not as competitive as it used to be. The buyers are keeping rather than waiving their contingencies. If there are problems during the homebuying process, they can call the deal off.