Realtors are facing an unprecedented increase in home buyers withdrawing from purchase agreements, as consumers become more discerning in a challenging real estate market.
In June, nearly 56,000 home-purchase contracts were canceled, amounting to 15% of all homes that were under contract that month, according to a report from Redfin. This marks the highest cancellation rate for the month of June ever recorded by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributed the trend to buyers who are second-guessing their decisions due to the elevated costs associated with home buying today. “They’re backing out due to minor issues because the monthly costs of buying a home are just too high to ignore without having everything on their must-have list,” Zubiate stated.
Rafael Corrales, a Redfin agent in Miami, noted experiencing “nightmare scenarios,” including last-minute drops from deals over trivial issues. Last month, around 2,500 home purchases in Miami were canceled, making up about 17.6% of homes that went under contract. However, Corrales emphasized that the primary concern remains affordability.
As of June, the median home sale price hit a new high of $442,525, with the average 30-year mortgage rate standing at 6.92%. In addition to the steep prices, potential buyers are grappling with increased insurance costs, property taxes, HOA fees, and other expenses associated with homeownership, all of which have been intensified by inflation.
The ongoing affordability crisis across the nation has driven home sales to experience their most significant decline in eight months, according to Redfin. Monthly home sales dropped by 0.5% in June, the largest decrease since October 2022. Year-over-year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.