Realtors are encountering an increasing number of buyers backing out of home purchase agreements as they become more selective in a challenging real estate market.
In June, nearly 56,000 home purchase agreements were rescinded, accounting for 15% of all homes that entered contracts that month, according to a report from Redfin. This marks the highest percentage of canceled deals for any June recorded by the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to a more discerning buyer demographic facing a costly 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 said.
Rafael Corrales, another Redfin agent based in Miami, reported witnessing “nightmare scenarios” of last-minute cancellations over trivial details. Approximately 2,500 home purchases were canceled in Miami last month, representing about 17.6% of homes that went under contract in June. Corrales emphasized that the primary concern is affordability.
The median home sale price reached a record high of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. In addition to elevated home costs and high mortgage rates, potential buyers face increased expenses from insurance, property taxes, HOA fees, and other costs associated with homeownership, all further intensified by inflation.
The growing lack of affordability across the nation has led to a significant decline in home sales, with Redfin reporting the largest drop in eight months. Home sales saw a 0.5% decrease from May to June, marking the steepest decline since October 2023. Compared to a year ago, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.