Realtors are experiencing a surge in buyers backing out of home purchase agreements, as potential homeowners become increasingly selective in a challenging real estate market.
A report from Redfin showed that nearly 56,000 home purchase agreements were terminated in June, accounting for 15% of all homes that went under contract that month. This statistic marks the highest cancellation rate for June since Redfin began tracking these figures.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed this trend to buyers who are reconsidering their decisions due to a more expensive 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.”
Rafael Corrales, a Redfin agent in Miami, reported experiencing “nightmare scenarios” where buyers canceled at the last moment over trivial details. In Miami, approximately 2,500 home purchases were called off in June, representing roughly 17.6% of homes that went under contract. Corrales emphasized that the primary concern continues to be affordability.
The median sale price for homes reached a staggering $442,525 in June, with the average interest rate on a 30-year mortgage hitting 6.92%. In addition to the high prices, buyers are facing increased expenses from insurance, property taxes, and homeowner association fees, all of which have been amplified by inflation.
This ongoing issue of affordability has contributed to a significant decline in home sales nationwide, marking the biggest drop in eight months, as per Redfin. Monthly home sales decreased by 0.5% in June—the steepest drop since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.