Realtors are witnessing an unprecedented number of buyers withdrawing from home purchase agreements as buyer expectations increase in a challenging real estate market.
According to a report from Redfin, nearly 56,000 home purchase agreements were canceled in June, representing 15% of all homes that entered contracts that month. This marks the highest percentage recorded in June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in buyer retractions to an increasingly discerning buyer pool who is navigating a costly market. “Buyers are 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.
Rafael Corrales, another agent with Redfin in Miami, noted that he has encountered “nightmare scenarios” where buyers back out last minute over trivial details. In Miami alone, around 2,500 home purchases were canceled in June, accounting for about 17.6% of homes that entered into contract that month. Corrales indicated that the primary obstacle for buyers is affordability.
The median home sale price in June hit a record high of $442,525, while the average rate for a 30-year mortgage was 6.92%. Alongside the escalating prices, potential homebuyers are also facing additional burdens from rising insurance, property taxes, HOA fees, and other ownership costs, all intensified by inflation.
This lack of affordability has led to a significant decline in home sales nationwide, with Redfin reporting the largest drop in eight months. Monthly home sales fell by 0.5% in June, the most considerable decrease since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic levels.