Realtors are facing an increasing number of buyers backing out of home purchase agreements, as individuals become more selective in a challenging real estate market.
According to a report from Redfin, nearly 56,000 home purchase agreements were canceled in June, which accounts for 15% of all homes that went under contract that month. This marks the highest cancellation rate recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed the surge in canceled agreements to buyers who are grappling with high costs and are unwilling to compromise on their must-have lists. 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, another Redfin agent in Miami, expressed concern about “nightmare scenarios,” with some buyers canceling last minute over trivial matters. In Miami alone, about 2,500 home purchases were canceled in June, equating to 17.6% of homes that went under contract for the month. Corrales highlighted affordability as the primary concern for buyers.
The median home sale price surged to a record of $442,525 in June, with the average rate for a 30-year mortgage reaching 6.92%. In addition to the high home prices and mortgage rates, potential buyers are also facing rising costs from insurance, property taxes, HOA fees, and other expenses related to home ownership, all of which have been intensified by inflation.
The nationwide affordability crisis has led to a significant decline in home sales, with Redfin reporting the largest drop in eight months. Home sales decreased by 0.5% in June, marking the most considerable decline since October 2023. On a year-over-year basis, home sales fell by 1.1% and were down 21.5% compared to pre-pandemic figures.