Realtors are experiencing an unprecedented number of buyers backing out of home purchase agreements amid a challenging real estate market. A recent report from Redfin highlighted that almost 56,000 agreements fell through in June, representing 15% of all homes that were under contract during that month. This marks the highest percentage for June recorded by the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to increasingly selective buyers who are struggling with high costs. She noted that buyers are withdrawing from deals over minor issues since the overall monthly expenses of home ownership have become significant.
In Miami, Redfin agent Rafael Corrales reported witnessing “nightmare scenarios,” including last-minute cancellations over trivial details. Last month, about 2,500 home purchases were canceled in Miami, equating to 17.6% of homes that went under contract in June. He emphasized that the primary concern is affordability.
In June, the median home sale price hit a record high of $442,525, with the average rate for a 30-year mortgage at 6.92%. In addition to the elevated home prices and high mortgage rates, potential buyers are facing additional financial burdens such as insurance, property taxes, HOA fees, and other homeownership costs that have been amplified by inflation.
This lack of affordability has led to the sharpest decline in home sales in eight months, as reported by Redfin. Month-over-month, home sales dropped by 0.5% in June, marking the largest decline since October 2023. Year-over-year, sales fell by 1.1% and were down 21.5% compared to pre-pandemic levels.