Realtors are facing an unprecedented number of buyers backing out of home purchase agreements, as prospective homeowners become increasingly selective in a challenging real estate environment.
A recent report from Redfin revealed that nearly 56,000 home-purchase contracts were terminated in June, accounting for 15% of all homes under contract during that period. This marks the highest cancellation percentage recorded by Redfin for the month of June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers who are reconsidering their decisions due to the high costs associated with home purchases. She noted that even minor issues are prompting buyers to withdraw, as they feel pressured to meet their must-have lists in a costly market.
In Miami, Rafael Corrales, another Redfin agent, reported experiencing “nightmare scenarios” involving last-minute cancellations over trivial details. Approximately 2,500 home sales were canceled in Miami last month, representing about 17.6% of homes that went under contract. Corrales emphasized that the primary concern for buyers is affordability.
In June, the median home sale price reached a record $442,525, accompanied by an average 30-year mortgage rate of 6.92%. Alongside these high home prices and elevated mortgage rates, buyers are also facing increased costs from insurance, property taxes, Homeowners Association (HOA) fees, and other associated expenses, all worsened by inflation.
This general decline in market affordability has contributed to a significant drop in home sales, marking the steepest decline in eight months, as noted by Redfin. Month-over-month, home sales decreased by 0.5% in June, the largest reduction since October 2023. Year-over-year comparisons show a 1.1% decline in home sales, placing them 21.5% below pre-pandemic levels.