Realtors are experiencing an unprecedented number of buyers retracting their home purchase agreements, as buyers have become more discerning in the current challenging real estate market.
A report from Redfin indicates that nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all transactions that month. This marks the highest cancellation rate for June in the history of the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers focusing on more specific needs, particularly in light of the escalating costs associated with homeownership. She noted, “Buyers are backing out due to minor issues because the monthly costs related to purchasing a home right now are simply too high to justify not securing everything on their must-have list.”
In Miami, fellow Redfin agent Rafael Corrales has witnessed “nightmare scenarios,” including last-minute cancellations based on trivial matters. In June, Miami saw around 2,500 canceled home purchases, which represents approximately 17.6% of homes that were under contract. Corrales pointed out that the primary challenge for buyers is affordability.
The median home sale price reached a historic $442,525 in June, with the average 30-year mortgage rate at 6.92%. Coupled with already high home prices and sustained elevated mortgage rates, potential buyers are further burdened by additional costs such as insurance, property taxes, and homeowners association fees, which have been intensified by inflation.
This widespread lack of affordability is contributing to a notable downturn in home sales, which have seen their most significant decline in eight months, according to Redfin. Month over month, home sales decreased by 0.5% in June, marking the sharpest decline since October 2023. Year over year, sales fell by 1.1% and remain 21.5% below levels seen prior to the pandemic.