Realtors are experiencing an unprecedented number of buyers backing out of home-purchase agreements as consumers grow increasingly selective in a challenging real estate environment.
A report from Redfin revealed that nearly 56,000 home-purchase agreements were annulled in June, which represents 15% of all homes that entered contract that month—marking the highest cancellation rate recorded for June by the real estate site.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are becoming more particular, as they navigate a market characterized by elevated costs.
“They are withdrawing from deals over minor issues because the monthly expenses tied to purchasing a home today are simply too significant to overlook if they cannot meet their exact requirements,” Zubiate explained.
Rafael Corrales, a Redfin agent based in Miami, described “nightmare scenarios” where buyers pull out at the last moment due to trivial details. In Miami alone, approximately 2,500 home transactions were canceled in June, amounting to around 17.6% of homes that went under contract that month. Nonetheless, Corrales highlighted that the predominant concern is affordability.
The median home sale price hit an all-time high of $442,525 in June, with the average mortgage rate for a 30-year loan at 6.92%. In addition to high home prices and elevated mortgage rates, prospective buyers are also contending with additional costs such as insurance, property taxes, HOA fees, and various expenses linked to homeownership, which have all been intensified by inflation.
This widespread lack of affordability has led to the most significant decline in home sales seen in eight months, as reported by Redfin. Monthly sales dropped by 0.5% in June, representing the steepest decline since October 2023. Compared to the previous year, home sales decreased by 1.1% and were 21.5% lower than levels observed before the pandemic.