Realtors are experiencing an increase in buyers backing out of home purchase agreements as the real estate market becomes more challenging.
In June, nearly 56,000 home purchase agreements were abandoned, amounting to 15% of all contracts that month, according to a report from Redfin released on Tuesday. This marks the highest percentage for any June recorded by the real estate company.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers becoming more selective as they face a high-cost 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, a Redfin agent in Miami, reported witnessing distressing situations, including last-minute cancellations over trivial matters. Approximately 2,500 home purchases were canceled in Miami last month, representing about 17.6% of homes that went under contract in June. He highlighted that affordability remains the major challenge for buyers.
The median home sale price hit a record high of $442,525 in June, with the average 30-year mortgage rate at 6.92%. In addition to steep home prices and high mortgage rates, potential homebuyers are also burdened by rising insurance costs, property taxes, HOA fees, and other homeownership expenses, all intensified by inflation.
This nationwide lack of affordability has resulted in the largest decline in home sales in eight months, with Redfin reporting a 0.5% drop in June—a significant decrease not seen since October 2023. Year-over-year, home sales decreased by 1.1% and are 21.5% lower than levels seen before the pandemic.