Realtors are encountering a significant increase in buyers backing out of home purchase agreements as individuals become more selective in a challenging real estate environment.
In June, nearly 56,000 home purchase agreements were canceled, representing 15% of all homes that went under contract that month, according to a report from Redfin. This marks the highest percentage recorded for any June since the company began tracking these figures.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers who are more discerning due to the high costs associated with purchasing a home in the current market. She noted that buyers are withdrawing over minor issues since the financial commitment required today makes it crucial to meet their essential criteria.
Rafael Corrales, a Redfin agent based in Miami, indicated that he has witnessed challenging situations unfold, including last-minute cancellations over trivial matters. Approximately 2,500 home purchases were canceled in Miami in June, accounting for around 17.6% of contracted homes. Corrales emphasized that affordability remains the central challenge for buyers.
The median home sale price rose to a record $442,525 in June, coupled with the average 30-year mortgage rate at 6.92%. Potential buyers face additional financial burdens from insurance, property taxes, homeowner association fees, and other ownership-related expenses, all of which have been intensified by inflation.
The nationwide struggle with affordability has led to a significant drop in home sales, marking the largest decrease in eight months, according to Redfin. Home sales fell by 0.5% in June compared to the previous month, the steepest decline since October 2023. Year-over-year, sales dropped 1.1% and were 21.5% lower than the levels seen before the pandemic.