Realtors are experiencing an unprecedented number of buyers backing out of home purchase agreements as the real estate market becomes increasingly challenging. A recent Redfin report revealed that in June, nearly 56,000 purchase agreements were terminated, which represents 15% of all homes that went under contract that month. This marks the highest percentage ever recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes this increase in buyer hesitance to a more discerning consumer base that is struggling with rising costs. 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, a Redfin agent in Miami, echoed these sentiments, describing “nightmare scenarios” where buyers canceled agreements over trivial matters. In Miami alone, around 2,500 home purchases were abandoned in June, representing approximately 17.6% of homes that had gone under contract. Corrales expressed that the main concern remains affordability.
The median home sale price soared to a record $442,525 in June, while the average rate for a 30-year mortgage reached 6.92%. In addition to the escalating housing costs and high mortgage rates, potential buyers are also faced with burdens related to insurance, property taxes, HOA fees, and other homeownership expenses that have worsened due to inflation.
This widespread lack of affordability has contributed to the largest decline in home sales in eight months, as reported by Redfin. Compared to the previous month, home sales dipped by 0.5% in June, marking the most significant decrease since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic figures.