Realtors are witnessing an increasing trend of buyers backing out of home purchase agreements, with many becoming more discerning in the challenging real estate market.
According to a Redfin report released on Tuesday, nearly 56,000 home-purchase agreements fell through in June, representing 15% of all homes that entered contract that month. This marks the highest cancellation rate recorded in June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers’ heightened selectivity amidst a costly housing market. 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, another Redfin agent in Miami, reported witnessing significant last-minute cancellations driven by trivial details. Last month, approximately 2,500 home purchases were canceled in Miami, amounting to about 17.6% of homes under contract in June. Corrales emphasized that the primary concern for buyers remains affordability.
The median home sale price hit a record high of $442,525 in June, coinciding with an average 30-year mortgage rate of 6.92%. In addition to the steep cost of homes and elevated mortgage rates, prospective buyers are also facing challenges from insurance, property taxes, homeowners association fees, and other expenses linked to homeownership, all of which have been intensified by inflation.
The ongoing affordability crisis in the housing market has led to the most significant decline in home sales in eight months, as reported by Redfin. Month-over-month, home sales dropped by 0.5% in June, marking the largest decrease since October 2023. Comparatively, year-over-year home sales fell by 1.1% and stood 21.5% below pre-pandemic levels.