Realtors are experiencing an unprecedented number of buyers backing out of home purchase agreements, as prospective homeowners become more choosy in a challenging real estate environment.
According to a recent report from Redfin, nearly 56,000 home-purchase agreements were abandoned in June, representing 15% of all homes that went under contract during that month. This marks the highest percentage recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in contract cancellations to increasingly selective buyers who are struggling with high housing costs. She noted, “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.”
Rafael Corrales, a Redfin agent based in Miami, has witnessed troubling trends, including last-minute cancellations over trivial matters. In June alone, approximately 2,500 home purchases were canceled in Miami, accounting for about 17.6% of homes that had gone under contract. Corrales pointed out that affordability remains the primary concern for many buyers.
As of June, the median home sale price hit a staggering $442,525, while the average 30-year mortgage rate stood at 6.92%. In addition to the rising prices and elevated mortgage rates, prospective buyers are also facing increased burdens from insurance, property taxes, homeowner association dues, and various other ownership costs, all worsened by inflation.
The national affordability crisis has contributed to a significant decline in home sales, with Redfin reporting the largest decrease in eight months. Home sales dipped 0.5% in June compared to the previous month, marking the steepest decline since October 2023. Year-over-year, home sales fell by 1.1%, landing at 21.5% below levels seen before the pandemic.