Realtors are facing an unprecedented number of buyers backing out of home purchase agreements, with significant selectivity observed in the current challenging real estate market.
According to a recent report by Redfin, nearly 56,000 home purchase contracts fell through in June, accounting for 15% of all homes that went under contract during that month. This marks the highest percentage recorded for any June in the history of the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes the increase in cancellations to buyers becoming more discerning amid rising market costs. “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,” she explained.
Rafael Corrales, a Redfin agent in Miami, noted experiencing “nightmare scenarios,” where last-minute cancellations occur over trivial details. In Miami alone, about 2,500 home purchases were called off last month, representing approximately 17.6% of homes that entered contracts in June. Corrales highlighted that the core issue is the lack of affordability.
The median home sale price hit a record $442,525 in June, with the average 30-year mortgage rate at 6.92%. Additionally, buyers are burdened by high insurance costs, property taxes, homeowners association (HOA) fees, and other expenses tied to homeownership, all aggravated by inflation.
Widespread affordability challenges have led to a notable decline in home sales nationwide, reported Redfin. Monthly home sales dipped by 0.5% in June, marking the largest decrease since October 2023. Year-over-year, home sales saw a 1.1% decrease and are currently 21.5% below pre-pandemic levels.