Realtors are facing an unprecedented number of buyers backing out of home purchase agreements, as consumers become more selective in the challenging real estate market.
In June, nearly 56,000 home-purchase agreements were canceled, accounting for 15% of all homes that went under contract during the month, a record high for this period, according to a report from Redfin released on Tuesday.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in cancellations to a more discerning group of buyers who are struggling with higher expenses associated with home-buying.
“They’re backing out due to minor issues because the monthly costs of buying a home today are just too high to justify not getting everything on their must-have list,” Zubiate explained.
Rafael Corrales, another Redfin agent based in Miami, noted that he has witnessed “nightmare scenarios” unfold, including last-minute deal cancellations over trivial details. In Miami, approximately 2,500 home purchases were canceled last month, representing about 17.6% of homes that went under contract in June. Corrales emphasized that the primary challenge is affordability.
The median home sale price reached a record $442,525 in June, with the average rate on a 30-year mortgage at 6.92%. Along with steep home prices and elevated mortgage rates, prospective buyers are also facing additional burdens from insurance, property taxes, HOA fees, and other costs of homeownership that have been intensified by inflation.
Nationwide, the lack of affordability in the market has led to the most significant decline in home sales seen in the past eight months, according to Redfin. Monthly home sales dropped by 0.5% in June—the largest decline since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic levels.