Realtors are facing an unprecedented number of buyers backing out of home purchase agreements, as prospective homeowners become increasingly selective in a challenging real estate market.
A recent report from Redfin revealed that nearly 56,000 home-purchase agreements, accounting for 15% of all contracts in June, were canceled. This represents the highest cancellation rate recorded for the month of June.
According to Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, many buyers are experiencing “cold feet” due to the burdens of high monthly costs. She noted that buyers are withdrawing from deals over minor issues because they feel pressured to secure everything on their ‘must-have’ lists, given the current financial landscape.
Rafael Corrales, another agent with Redfin in Miami, reported witnessing “nightmare scenarios” where cancellations occurred at the last minute due to small details. In June alone, approximately 2,500 home purchases were rescinded in Miami, representing about 17.6% of homes that were under contract. Corrales emphasized that affordability remains the primary concern for buyers.
In June, the median home sale price hit a record high of $442,525, while the average 30-year mortgage rate climbed to 6.92%. In addition to elevated home prices and mortgage rates, potential buyers are also facing increased costs from insurance, property taxes, HOA fees, and other expenses, all of which have been worsened by inflation.
The ongoing affordability crisis has resulted in the most significant decline in home sales in the past eight months. Redfin’s data indicated that home sales fell by 0.5% in June compared to the previous month, marking the largest decrease since October 2023. Year-over-year home sales also saw a decline of 1.1% and were down 21.5% from pre-pandemic levels.