Realtors are facing an increase in buyers backing out of home purchase agreements as individuals become more selective in a challenging real estate market.
A report from Redfin indicated that almost 56,000 home purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest percentage recorded for any June in the site’s history.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are more discerning amid rising market costs. “They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to justify not getting everything on their must-have list,” Zubiate noted.
Rafael Corrales, another Redfin agent in Miami, reported experiencing “nightmare scenarios,” including last-minute cancellations for small details. In Miami alone, around 2,500 home purchases were canceled last month, amounting to approximately 17.6% of homes that went under contract in June. Corrales pointed out that affordability remains the primary concern.
The median home sale price reached a record $442,525 in June, coinciding with an average 30-year mortgage rate of 6.92%. In addition to the high home prices and elevated mortgage rates, potential buyers are also confronting increased costs related to insurance, property taxes, and homeowners association fees, all heightened by inflation.
The national affordability issue has contributed to a significant drop in home sales, as reported by Redfin. Monthly home sales fell by 0.5% in June, marking the steepest decline since October 2023. Year-over-year, home sales decreased by 1.1% and are currently 21.5% below levels observed before the pandemic.