Realtors are experiencing a significant rise in the number of buyers backing out of home purchase agreements amidst a challenging real estate market.
According to a report by Redfin, nearly 56,000 home-purchase agreements fell through in June, representing 15% of all homes that went under contract for the month. This is the highest rate recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes the increase in cancellations to more selective buyers facing high market prices. 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.”
Miami-based Redfin agent Rafael Corrales reported facing “nightmare scenarios” with last-minute cancellations over trivial details. In June alone, around 2,500 home purchases were canceled in Miami, amounting to approximately 17.6% of homes under contract. Corrales highlighted affordability as the primary issue for buyers.
The median home sale price reached a record high of $442,525 in June, with the average 30-year mortgage rate at 6.92%. Prospective buyers are also contending with rising costs related to insurance, property taxes, HOA fees, and other expenses associated with homeownership, all exacerbated by inflation.
This lack of affordability has led to a significant decline in home sales nationwide, marking the largest decrease in eight months. Redfin reported a 0.5% month-over-month decline in home sales for June, the most considerable drop since October 2023. Year-over-year, home sales fell by 1.1% and remain 21.5% below levels experienced before the pandemic.