Realtors are encountering an increasing number of buyers backing out of home purchase agreements, as many individuals become more particular in a challenging real estate market.
In June, nearly 56,000 home purchase agreements were canceled, representing 15% of all homes that went under contract during that month, according to a report from Redfin. This marks the highest percentage recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the surge in last-minute cancellations to buyers becoming choosier amid rising 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 stated.
Similarly, Rafael Corrales, a Redfin agent in Miami, noted experiencing “nightmare scenarios” such as abrupt cancellations over trivial matters. Approximately 2,500 home purchases were canceled in Miami last month, amounting to around 17.6% of homes that went under contract in June. However, Corrales emphasized that the primary concern lies in affordability.
In June, the median home sale price reached a record high of $442,525, while the average rate for a 30-year mortgage stood at 6.92%. Alongside the elevated home prices and ongoing high mortgage rates, potential buyers are also facing increased burdens from insurance, property taxes, HOA fees, and other costs related to homeownership, all of which have been intensified by inflation.
The overall lack of affordability in the market has contributed to the steepest decline in home sales in the past eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, marking the largest drop since October 2023. Year-over-year, home sales fell by 1.1% and remain 21.5% below pre-pandemic levels.