Realtors are facing an unprecedented number of buyers backing out of home purchase agreements, as consumers grow more selective in a challenging real estate landscape.
In June, nearly 56,000 home-purchase agreements were canceled, representing 15% of all contracts for that month, according to a report by Redfin. This marks the highest percentage recorded for June since the site began tracking these statistics.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes the spike in cancellations to buyers becoming more discerning, as they confront a pricier housing market. “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,” Zubiate explained.
Likewise, Rafael Corrales, a Redfin agent in Miami, has witnessed troubling trends, including last-minute cancellations over trivial matters. In Miami alone, around 2,500 home purchases were canceled last month, amounting to approximately 17.6% of homes that went under contract in June. Corrales emphasized that the main hurdle for buyers is affordability.
The median home sale price reached a record $442,525 in June, while the average 30-year mortgage rate stood at 6.92%. In addition to the elevated home prices and persistent mortgage rates, potential buyers are grappling with increased insurance costs, property taxes, HOA fees, and various other expenses tied to homeownership that have been worsened by inflation.
This overall lack of affordability has led to a significant decline in home sales nationally, marking the steepest drop in eight months. According to Redfin, home sales dropped by 0.5% in June, the largest decrease since October 2023. Year-over-year, home sales fell by 1.1% and are currently 21.5% below pre-pandemic levels.