Realtors are experiencing an increasing number of home buyers backing out of purchase agreements, driven by heightened selectivity in a challenging real estate market. A recent report from Redfin revealed that nearly 56,000 home-purchase agreements were canceled in June, equating to 15% of all homes that went under contract that month. This marks the highest percentage for June ever recorded by the real estate service.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed this trend to buyers feeling the squeeze of a more expensive housing market. She commented that many potential buyers are withdrawing their offers over relatively minor issues because the ongoing monthly costs associated with homeownership are too significant to overlook.
In Miami, agent Rafael Corrales has witnessed “nightmarish scenarios” unfold, including last-minute cancellations over trivial details. Approximately 2,500 home purchases in Miami were called off last month, representing about 17.6% of homes that were under contract. Corrales noted that the primary concern for buyers remains affordability.
The median sale price for homes reached an all-time high of $442,525 in June, while the average interest rate for a 30-year mortgage climbed to 6.92%. In addition to high prices and mortgage rates, buyers are facing escalating costs associated with insurance, property taxes, homeowners association fees, and other expenses that have been impacted by inflation.
This overall lack of affordability has led to a significant drop in home sales, which saw its steepest decline in eight months, as reported by Redfin. Sales fell by 0.5% from the previous month in June—the largest decrease since October 2022. Compared to the previous year, home sales fell by 1.1% and remain 21.5% lower than pre-pandemic levels.
Despite the current challenges in the housing market, there is a silver lining. As buyers approach the market with increased caution, this diligence may lead to a more sustainable environment in the long run. With careful consideration, buyers can make informed decisions that will ultimately support their financial wellbeing and that of the market as a whole. The hope is that as the market adjusts, it could provide opportunities for more equitable conditions, making homeownership attainable for a broader swath of the population.