Realtors are experiencing an unprecedented increase in buyers backing out of home purchase agreements, as consumers become more discerning amid challenging market conditions.
According to a report by Redfin, nearly 56,000 home purchase agreements, which amounts to 15% of all homes that went under contract in June, fell through. This is the highest percentage recorded for any June by the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the increase in withdrawals to buyers’ heightened selectivity in a more costly market. “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 noted.
In Miami, Redfin agent Rafael Corrales observed dramatic last-minute cancellations over minor details, with around 2,500 home purchases canceled in June, representing roughly 17.6% of homes that were under contract. He highlighted affordability as the primary concern affecting buyers.
The median home sale price hit a record high of $442,525 in June, while the average rate for a 30-year mortgage rose to 6.92%. In addition to the elevated prices of homes and ongoing high mortgage rates, potential homebuyers are facing additional burdens from insurance, property taxes, homeowner association fees, and other costs associated with homeownership, all intensified by inflation.
This widespread lack of affordability has led to a significant decline in home sales nationally, marking the largest drop in eight months, as reported by Redfin. Home sales decreased by 0.5% month-over-month in June, which is the most considerable decline since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.