Realtors are encountering an increasing number of buyers who are pulling out of home purchase agreements, as prospective homeowners become more particular in a challenging real estate market.
A recent report from Redfin revealed that nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract during that month. This marks the highest percentage of cancellations recorded in June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in backed-out deals to buyers who are now seeking to meet a stricter set of requirements in the face of rising costs.
“They are backing out due to minor issues because the monthly expenses tied to buying a home today are simply too high to overlook when not every item on their must-have list is fulfilled,” Zubiate explained.
Rafael Corrales, a Redfin agent in Miami, noted that there have been “nightmare scenarios,” such as last-minute cancellations triggered by small details. In Miami alone, around 2,500 home purchases were canceled last month, amounting to approximately 17.6% of homes that went under contract in June. However, Corrales emphasized that the primary concern is affordability.
The median home sale price hit a record high of $442,525 in June, while the average rate for a 30-year mortgage reached 6.92%. In addition to elevated home prices and mortgage rates, prospective buyers are facing additional financial burdens from insurance, property taxes, HOA fees, and other associated costs that have been increased by inflation.
This widespread lack of affordability has led to a significant decrease in home sales nationwide, marking the largest drop in eight months, as reported by Redfin. Month-over-month, home sales fell by 0.5% in June, the largest decline since October 2023. Compared to last year, home sales decreased by 1.1% and remained 21.5% below levels seen before the pandemic.