Real estate agents are encountering an increasing number of buyers walking away from purchase agreements, as consumers have become more selective in a challenging housing market.
According to a report from Redfin, nearly 56,000 home-purchase agreements, representing 15% of all homes under contract in June, were canceled. This figure marks the highest cancellation rate for the month of June ever recorded by the real estate company.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in backouts to pickier buyers who are faced with higher costs in the current market. She noted, “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.”
In Miami, Rafael Corrales, another Redfin agent, reported experiencing “nightmare scenarios” with last-minute cancellations over trivial details. Last month, approximately 2,500 home purchases were called off in Miami, accounting for about 17.6% of homes that went under contract in June. Corrales emphasized that the primary concern for buyers is affordability.
The median home sale price surged to a record $442,525 in June, with the average 30-year mortgage rate reaching 6.92%. In addition to the high home prices and mortgage rates, potential buyers are also burdened by insurance, property taxes, homeowners association fees, and other costs associated with homeownership—all made more challenging by inflation.
This widespread lack of affordability in the housing market has led to the most significant decline in home sales in eight months, as reported by Redfin. On a monthly basis, home sales saw a decrease of 0.5% in June, the largest drop since October 2023. Year-over-year, home sales fell by 1.1%, which left them 21.5% below the levels observed before the pandemic.