Realtors are facing an unprecedented number of buyers backing out of home purchase agreements as consumers become more selective in a challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest cancellation rate recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the uptick in cancellations to buyers who are being more meticulous due to the high costs associated with purchasing a home. “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 stated.
Similarly, Rafael Corrales, another Redfin agent based in Miami, reported experiencing “nightmare scenarios” of last-minute cancellations over trivial matters. In Miami alone, approximately 2,500 home purchases were canceled last month, equating to about 17.6% of homes that entered into contract in June. Corrales emphasized that the central issue is affordability.
The median sale price for homes reached a record $442,525 in June, with the average interest rate for a 30-year mortgage at 6.92%. Prospective buyers are also contending with high insurance costs, property taxes, homeowners association fees, and other expenses related to homeownership, all of which have been compounded by inflation.
This widespread lack of affordability across the nation has contributed to a notable decline in home sales, with Redfin reporting the largest monthly decrease in eight months. Home sales fell by 0.5% in June, the most significant drop since October 2022. Year-over-year, sales decreased by 1.1% and were 21.5% lower than pre-pandemic levels.