Realtors are experiencing an increase in buyers who decide not to follow through with their home purchase agreements, as people become more selective in a challenging real estate market.
Nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month, according to a Redfin report published Tuesday. This marks the highest percentage for any June recorded by the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers being more selective amid a more costly market.
“They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to justify not getting everything on their must-have list,” Zubiate said.
Rafael Corrales, another Redfin agent based in Miami, has witnessed “nightmare scenarios” including last-minute cancellations over small details. Around 2,500 home purchases were canceled in Miami last month, about 17.6% of homes that went under contract in June. Corrales pointed out that the primary issue is affordability.
The median home sale price reached a record $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. In addition to the high costs of homes and still-high mortgage rates, potential buyers are also dealing with insurance, property taxes, HOA fees, and other ownership costs that have increased due to inflation.
Nationwide, the lack of affordability has led to the biggest decline in home sales in eight months, as reported by Redfin. Home sales dropped 0.5% on a monthly basis in June — the largest decline since October 2023. Year-over-year, home sales fell 1.1% and were 21.5% below pre-pandemic levels.