Realtors are experiencing a surge in buyers backing out of home purchase agreements, as consumers become increasingly selective in a challenging real estate market.
According to a recent report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This figure marks the highest percentage for any June recorded by the real estate website.
Julie Zubiate, a real estate agent with Redfin Premier in the San Francisco Bay Area, attributes the increase in cancellations to buyers feeling pressured in a market that is both expensive and selective. “Buyers are backing out for minor issues because the monthly expenses tied to purchasing a home right now are too significant to overlook if their must-have list isn’t fully met,” Zubiate explained.
Rafael Corrales, a Redfin agent in Miami, reported witnessing numerous “nightmare scenarios” where deals fell apart over trivial concerns. Approximately 2,500 home purchases in Miami were canceled last month, constituting about 17.6% of the homes under contract in June. Corrales emphasized that the primary challenge for buyers remains affordability.
The median home sale price hit a historic high of $442,525 in June, while the average interest rate for a 30-year mortgage rose to 6.92%. With the elevated prices of homes coupled with high mortgage rates, potential buyers are also facing increased burdens from insurance, property taxes, homeowners association dues, and other ownership costs, all worsened by inflation.
The nationwide affordability crisis in the housing market has led to a significant decline in home sales, which saw their largest drop in eight months, according to Redfin. Home sales fell by 0.5% in June month-over-month, marking the steepest decline since October 2023. Year-over-year, sales decreased by 1.1% and were 21.5% below levels seen before the pandemic.