Realtors are facing a significant increase in buyers withdrawing from home purchase agreements as the real estate market becomes more challenging.
In June, nearly 56,000 agreements fell through, translating to 15% of all homes that went under contract during that month, according to a report from Redfin. This marks the highest percentage for June ever recorded by the platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to more discerning buyers who are struggling with high market prices. “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.
Rafael Corrales, a Redfin agent in Miami, described seeing troubling situations, including last-minute cancellations over trivial matters. Approximately 2,500 home purchases were canceled in Miami last month, which constitutes about 17.6% of homes under contract in June. Corrales noted that affordability remains the primary concern.
The median home sale price hit a record high of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. Additionally, prospective buyers are facing rising expenses related to insurance, property taxes, HOA fees, and other ownership costs, all worsened by inflation.
The nationwide affordability crisis has led to the largest decline in home sales in eight months, per the Redfin report. Monthly sales decreased by 0.5% in June, marking the steepest drop since October 2023. Additionally, year-over-year home sales fell by 1.1%, placing them 21.5% below levels observed before the pandemic.