Real estate agents are facing an unprecedented number of buyers backing out of home purchase agreements as consumers become more discerning in a challenging market. According to a report from Redfin, nearly 56,000 home-purchase agreements fell through in June, accounting for 15% of contracts during that month, marking the highest rate recorded for any June by the platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this increase in cancellations to a more selective buyer base struggling with the high costs associated with home buying today. She noted that many buyers are backing out over minor issues, as the financial implications of purchasing a home are significant.
Rafael Corrales, a Miami-based Redfin agent, echoed these sentiments, describing some situations as “nightmare scenarios” where buyers back out at the last minute over small details. In June, around 2,500 home purchase agreements were canceled in Miami, representing about 17.6% of contracts in the area. Corrales pointed out that the root issue remains affordability.
The median home sale price reached an all-time high of $442,525 in June, while the average rate for a 30-year mortgage stood at 6.92%. In addition to high home prices and elevated mortgage rates, potential buyers are contending with soaring insurance costs, property taxes, homeowners’ association fees, and other expenses tied to homeownership that have been intensified by inflation.
Redfin’s report indicated that the national affordability crisis has led to the most significant decline in home sales in eight months. Month-over-month, home sales decreased by 0.5% in June, the largest drop since October 2023. Year-over-year, home sales fell by 1.1%, remaining 21.5% below pre-pandemic levels.