Realtors are encountering 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 by Redfin, nearly 56,000 home purchase agreements collapsed in June, representing 15% of all homes that were under contract during the month. This marks the highest percentage recorded for any June since the agency began tracking such statistics.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes this increase in cancellations to buyers being more discerning, particularly due to the soaring costs of 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 explained.
In Miami, Redfin agent Rafael Corrales reported witnessing a variety of troubling situations, including last-minute withdrawals over insignificant details. Last month, around 2,500 home purchases were canceled in Miami alone, accounting for approximately 17.6% of contracts signed in June. Corrales noted that the overarching issue remains affordability.
June saw the median home sale price hit an all-time high of $442,525, while the average 30-year mortgage rate was recorded at 6.92%. In addition to the elevated home prices and high mortgage rates, potential buyers also face burdens from insurance, property taxes, homeowners association fees, and other costs related to homeownership, all of which have intensified due to inflation.
The nationwide affordability crisis has led to the most significant drop in home sales in eight months, as indicated by Redfin. Monthly home sales fell by 0.5% in June, marking the largest decline since October 2023. Compared to the same period last year, home sales dropped by 1.1% and were 21.5% below pre-pandemic figures.