Realtors are facing an increasing number of buyers backing out of home purchase agreements as buyers become more selective in a challenging real estate market.
In June, nearly 56,000 home-purchase agreements were canceled, representing 15% of all homes that went under contract that month, according to a report by Redfin. This marks the highest percentage of any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the trend to buyers being more particular due to escalating costs. “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 explained.
Rafael Corrales, another Redfin agent based in Miami, reported on “nightmare scenarios” where buyers canceled last-minute over trivial concerns. In Miami, about 2,500 home purchases were canceled last month, amounting to 17.6% of the homes that went under contract in June. Corrales noted that the primary challenge is affordability.
The median home sale price reached an all-time high of $442,525 in June, with the average 30-year mortgage rate at 6.92%. In addition to high home prices and elevated mortgage rates, prospective buyers are also burdened by additional costs such as insurance, property taxes, homeowner association fees, and other expenses tied to homeownership, all of which have been intensified by inflation.
Nationwide, the affordability crisis has contributed to the most significant decline in home sales in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, marking the largest drop since October 2023. Year-over-year, home sales dropped 1.1% and stood 21.5% below levels observed before the pandemic.