Realtors are experiencing an unprecedented number of buyers backing out of home purchase agreements, as consumer preferences shift in a challenging real estate market.
According to a report from Redfin published on Tuesday, nearly 56,000 home purchase agreements were canceled in June. This figure comprises 15% of all homes that went under contract that month, marking the highest percentage recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed this increase in cancellations to a more discerning pool of buyers who are navigating a costly market. 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, another Redfin agent in Miami, reported witnessing “nightmare scenarios” where last-minute cancellations occurred over trivial matters. In Miami, approximately 2,500 home purchases were canceled last month, representing about 17.6% of homes under contract in June. Corrales emphasized that the primary challenge remains affordability.
The median sale price for homes hit a record high of $442,525 in June, with the average interest rate for a 30-year mortgage at 6.92%. In addition to high home prices and elevated mortgage rates, prospective buyers are facing increased burdens from insurance, property taxes, HOA fees, and other costs related to homeownership, all of which have been amplified by inflation.
This growing lack of affordability has resulted in a significant decline in home sales across the nation, according to Redfin. Monthly home sales fell by 0.5% in June, marking the largest drop since October 2023. Year-over-year, home sales decreased by 1.1%, and they stand at 21.5% lower than pre-pandemic levels.