Realtors are encountering a significant increase in buyers backing out of home purchase agreements, a trend attributed to heightened selectiveness amidst a challenging real estate environment.
According to a report from Redfin, nearly 56,000 home purchase agreements were canceled in June, representing 15% of all contracts that month, the highest recorded percentage for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, noted that buyers are becoming more hesitant, often withdrawing from contracts over minor issues. The escalating monthly costs related to home ownership have made it imperative for buyers to secure everything on their wish lists.
Rafael Corrales, another Redfin agent based in Miami, described alarming scenarios where transactions fell through due to trivial details. In Miami alone, about 2,500 home purchases were canceled in June, amounting to approximately 17.6% of homes under contract. Corrales pointed out that the primary concern remains affordability.
In June, the median home sale price reached a record high of $442,525, while the average rate for a 30-year fixed mortgage stood at 6.92%. The combined pressures of high home prices, elevated mortgage rates, and additional expenses such as insurance, property taxes, and homeowners association fees, have been intensified by inflation.
The ongoing affordability crisis nationwide has contributed to the most significant decline in home sales in the past eight months, according to Redfin. On a month-to-month basis, home sales decreased by 0.5% in June—the steepest drop since October 2023. Year-over-year, home sales fell by 1.1% and remained 21.5% below pre-pandemic figures.