Realtors are experiencing an unprecedented number of buyers backing out of home-purchase agreements, as the current real estate market becomes more challenging.
A recent report from Redfin revealed that nearly 56,000 home sales fell through in June, which accounts for 15% of all contracts that month—marking the highest percentage for any June on record.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed this increase in cancellations to buyers becoming more selective due to the high costs associated with home purchasing. 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 in Miami, described “nightmare scenarios” where last-minute cancellations are common, with about 2,500 home purchases canceled in June, representing around 17.6% of homes that went under contract in that area. He emphasized that the primary concern for buyers is affordability.
The median home sale price reached a record $442,525 in June, with the average rate on a 30-year mortgage at 6.92%. Besides the steep prices for homes and high mortgage rates, prospective buyers are also facing additional financial burdens from insurance, property taxes, homeowners association fees, and other costs related to homeownership, all made worse by inflation.
This nationwide lack of affordability has led to a significant decline in home sales, marking the largest drop in eight months. Home sales decreased by 0.5% in June compared to the previous month, the most considerable decline since October 2023. Year-over-year, home sales fell by 1.1%, which positions them 21.5% below pre-pandemic levels.