Realtors are facing an increasing number of buyers withdrawing from home purchase agreements as potential homeowners become more selective in a challenging real estate market.
In June, nearly 56,000 home purchase agreements were canceled, representing 15% of all contracts that month, as reported by Redfin. This marks the highest cancellation rate for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed this trend to buyers backing out due to minor issues, citing that the costs associated with home buying are currently too high to compromise on essential features.
Similarly, Rafael Corrales, a Redfin agent in Miami, noted experiencing “nightmare scenarios” where deals fell through over trivial details. In Miami alone, around 2,500 home purchases were canceled in June, amounting to approximately 17.6% of homes that were under contract. Corrales emphasized that affordability is the main concern.
In June, the median home sale price reached a record high of $442,525, with the average 30-year mortgage rate at 6.92%. Alongside escalating home prices and mortgage rates, prospective buyers are also faced with increased costs from insurance, property taxes, HOA fees, and other expenses impacted by inflation.
The nationwide affordability crisis has led to a significant decline in home sales, which experienced their largest drop in eight months, according to Redfin. Home sales decreased by 0.5% in June compared to the previous month, marking the biggest decline since October 2022. On a year-over-year basis, sales fell 1.1% and were 21.5% lower than pre-pandemic levels.