Realtors are facing an increasing number of buyers backing out of home purchase agreements, with the trend becoming more pronounced amid challenging market conditions.
According to a Redfin report, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest percentage recorded for June by the real estate site.
Julie Zubiate, a Redfin Premier estate agent in the San Francisco Bay Area, attributed the rise in cancellations to a more discerning buyer demographic who are dealing with elevated costs in the real estate market. She noted that buyers are withdrawing from deals over minor issues because the financial commitments associated with homeownership are now too significant to overlook.
Rafael Corrales, a Redfin agent in Miami, reported experiencing “nightmare scenarios” where buyers cancel agreements at the last minute due to trivial details. In Miami alone, approximately 2,500 home sales were canceled in June, accounting for around 17.6% of purchase contracts that month. Corrales emphasized that the primary concern for many buyers is affordability.
In June, the median home sale price surged to a record $442,525, while the average interest rate for a 30-year mortgage was recorded at 6.92%. Prospective buyers are additionally burdened by rising insurance costs, property taxes, homeowner association fees, and other expenses linked to homeownership which have been amplified by inflation.
The ongoing affordability crisis in the housing market has led to a significant decline in home sales, the largest seen in eight months, as per Redfin. Month-over-month, home sales dipped by 0.5% in June, marking the most substantial drop since October 2022. Year-over-year, home sales fell by 1.1% and were 21.5% lower compared to pre-pandemic levels.