Realtors are witnessing an unprecedented number of buyers backing out of home purchase agreements as the real estate market becomes increasingly challenging. A report from Redfin reveals that nearly 56,000 home-purchase agreements were canceled in June, amounting to 15% of all homes that were under contract that month. This marks the highest percentage recorded for June since tracking began.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the increase in cancellations to more selective buyers struggling with the high costs associated with home purchases. “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.
In Miami, fellow Redfin agent Rafael Corrales reported that he has encountered “nightmare scenarios,” with buyers canceling deals over minor details. In June alone, around 2,500 home purchases in Miami were canceled, representing approximately 17.6% of homes that were under contract. Corrales noted that the primary challenge for buyers is affordability.
The median home sale price reached a record high of $442,525 in June, coinciding with an average 30-year mortgage rate of 6.92%. In addition to the high home prices and elevated mortgage rates, potential buyers are also confronted with insurance, property taxes, HOA fees, and other ownership costs, all amplified by inflation.
This widespread lack of affordability has led to a significant decline in home sales nationwide, which have seen their largest drop in eight months, according to Redfin. On a monthly basis, home sales fell by 0.5% in June, the most considerable decrease since October 2023, and on a yearly basis, sales were down 1.1%, sitting 21.5% below pre-pandemic levels.