Realtors are experiencing an unprecedented number of buyers backing out of home purchase agreements, as prospective homeowners grow more discerning in a challenging real estate landscape.
In June, nearly 56,000 agreements to purchase homes were canceled, amounting to 15% of all homes that went under contract during the month, according to a report from Redfin released on Tuesday. This marks the highest cancellation rate recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed this surge in cancellations to buyers who are increasingly selective amid rising market costs.
“Buyers are pulling out over minor concerns because the current monthly expenses of buying a home are too significant to overlook without having all their must-have items,” Zubiate explained.
In Miami, Redfin agent Rafael Corrales reported seeing troubling scenarios unfold, including last-minute cancellations over small details. Approximately 2,500 home purchases were thwarted in Miami last month, representing about 17.6% of homes that entered contracts in June. Corrales pointed out that the primary challenge is affordability.
The median home sale price reached an all-time high of $442,525 in June, coinciding with an average rate of 6.92% for a 30-year mortgage. In addition to high home prices and elevated mortgage rates, potential buyers are also burdened by costs such as insurance, property taxes, and homeowner association fees, all of which have been impacted by inflation.
This lack of affordability has led to a significant decrease in home sales nationwide, marking the largest decline in eight months, as reported by Redfin. Month-over-month, home sales fell by 0.5% in June, representing the most considerable drop since October 2022. Year-over-year, sales fell by 1.1%, putting numbers 21.5% below pre-pandemic levels.