Realtors are witnessing a notable increase in buyers backing out of home purchase agreements, with a significant 15% of contracts falling through in June—a record high for that month, according to a report by Redfin. Many potential homeowners are now becoming pickier due to the challenging real estate market.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes this trend to buyers’ heightened expectations as they navigate a market with soaring 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.
In Miami, agent Rafael Corrales shared that he has encountered distressing situations where buyers cancel purchases over insignificant details, noting that approximately 2,500 contracts were canceled in June, representing about 17.6% of homes under contract that month. Corrales emphasized that the primary concern for these buyers is affordability.
The median home sale price reached an unprecedented $442,525 in June, alongside a 30-year mortgage rate averaging 6.92%. With high property costs, ongoing elevated mortgage rates, and additional expenses such as insurance, property taxes, and homeowners association fees, many buyers are feeling overwhelmed, especially in the wake of rising inflation.
This lack of market affordability has contributed to a significant dip in home sales, marking the largest decline in eight months, according to Redfin. Month-over-month, home sales decreased by 0.5% in June, while year-over-year sales fell by 1.1%, and were down 21.5% compared to pre-pandemic levels.
Despite these challenges, it is crucial to remain hopeful. The current market may be unsettling for buyers and sellers alike, but it also forces a reevaluation of priorities and expectations in homeownership. As the market stabilizes and interest rates potentially adjust in the future, there may be opportunities for buyers to find homes that better suit their needs and budget. Additionally, the increased selectivity among buyers may eventually lead to a more balanced and fair real estate environment for both parties.