Realtors are experiencing a surge in buyers backing out of home purchase agreements, as consumers become increasingly choosy in a challenging real estate market.
According to a report from Redfin released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes under contract during that month. This marks the highest percentage of cancellations recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes the increase in cancellations to buyers being more selective while navigating a high-cost market. “They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to rationalize not getting everything on their must-have list,” Zubiate explained.
Rafael Corrales, another Redfin agent based in Miami, noted that he has witnessed “nightmare scenarios” where last-minute cancellations occur over trivial details. Approximately 2,500 home purchases were canceled in Miami last month, accounting for about 17.6% of homes that went under contract in June. Corrales pointed out that the primary concern is affordability.
In June, the median home sale price hit a record high of $442,525, while the average interest rate on a 30-year mortgage stood at 6.92%. In addition to the elevated home prices and mortgage rates, potential buyers are also burdened by costs related to insurance, property taxes, homeowners association fees, and other expenses associated with homeownership, all of which have been intensified by inflation.
This widespread lack of affordability has led to the largest drop in home sales in eight months, as reported by Redfin. On a monthly basis, home sales decreased by 0.5% in June—the biggest decline since October 2022. Year-over-year, home sales fell by 1.1% and were down 21.5% compared to pre-pandemic levels.