Real estate agents are encountering an increasing number of buyers backing out of home purchase agreements as the market becomes more challenging. A recent report from Redfin revealed that nearly 56,000 home-purchase agreements fell apart in June, equating to 15% of all contracts that month, marking the highest rate recorded for any June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this rise in cancellations to buyers becoming more discerning and facing elevated costs in the housing market. She noted that buyers are withdrawing from deals over minor issues because the overall costs of home buying are too high to justify not securing everything on their wish lists.
In Miami, Redfin agent Rafael Corrales highlighted that he has witnessed “nightmare scenarios,” including last-minute cancellations based on trivial details. Last month, approximately 2,500 home purchases were canceled in Miami, representing about 17.6% of homes that went under contract. Corrales emphasized that the main concern is affordability.
The median sale price for homes hit a record high of $442,525 in June, while the average rate for a 30-year mortgage was 6.92%. In addition to expensive home prices and consistently high mortgage rates, prospective buyers are also facing increased burdens from insurance, property taxes, homeowners association fees, and other costs linked to homeownership, all made worse by inflation.
This overarching issue of affordability has contributed to the largest decline in home sales in eight months, according to Redfin. Month-over-month, home sales decreased by 0.5% in June, representing the most significant drop since October 2023. Compared to the previous year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic figures.