Realtors are facing an increasing number of buyers who are backing out of home purchase agreements, reflecting a more selective market in the face of rising real estate costs.
A recent report from Redfin revealed that nearly 56,000 home-purchase agreements, or 15% of contracts, were canceled in June, marking the highest percentage for that month on record.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers who are becoming more discerning amidst high 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,” she explained.
Rafael Corrales, a Redfin agent in Miami, noted that he has encountered numerous last-minute cancellations over seemingly trivial details. Last month alone, about 2,500 home purchases were canceled in Miami, translating to roughly 17.6% of homes that went under contract in June. He pointed out that affordability remains the principal concern for buyers.
In June, the median home sale price reached an all-time high of $442,525, with the average 30-year mortgage rate at 6.92%. Besides elevated home prices and mortgage rates, prospective buyers are also struggling with additional costs such as insurance, property taxes, and HOA fees, all driven higher by inflation.
The ongoing affordability crisis has resulted in a notable decline in home sales nationwide, according to Redfin. Sales decreased by 0.5% in June compared to the previous month, marking the most significant drop since October 2023. Year-over-year, home sales fell by 1.1% and remain 21.5% below pre-pandemic figures.