Realtors are facing a significant increase in buyers backing out of home purchase agreements, with more people becoming selective in a challenging real estate market.
According to a report from Redfin, nearly 56,000 home purchase agreements were canceled in June, amounting to 15% of all homes that went under contract during the month. This marks the highest percentage for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers who are becoming pickier in the face of 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,” she explained.
In Miami, Redfin agent Rafael Corrales noted that he has witnessed “nightmare scenarios,” including last-minute cancellations over trivial matters. In June, around 2,500 home purchases were canceled in Miami, representing approximately 17.6% of homes that were under contract. Corrales pointed out that the main concern for many buyers is affordability.
The median home sale price reached a record high of $442,525 in June, while the average rate for a 30-year mortgage was 6.92%. Along with the high home prices and elevated mortgage rates, prospective homebuyers are also contending with increased insurance, property taxes, HOA fees, and other expenses related to homeownership, all of which have been heightened by inflation.
This widespread lack of affordability has resulted in a significant decline in home sales across the nation, marking the largest drop in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June—the biggest decline since October 2023. Year-over-year comparisons show a dip of 1.1%, placing sales 21.5% lower than pre-pandemic levels.