Realtors are experiencing an increase in homebuyers backing out of agreements as a more selective clientele navigates a challenging real estate landscape.
According to a Redfin report released on Tuesday, nearly 56,000 home-purchase agreements fell through in June, which represents 15% of all homes that were under contract that month. This marks the highest percentage recorded for June since Redfin began tracking this data.
Julie Zubiate, a real estate agent with Redfin Premier in the San Francisco Bay Area, attributed the increase in cancellations to buyers becoming choosier amid rising market costs. “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.
Rafael Corrales, a Redfin agent based in Miami, reported witnessing significant last-minute cancellations over trivial matters. Approximately 2,500 home purchases were canceled in Miami last month, equating to about 17.6% of the homes that went under contract in June. Corrales emphasized that the root cause of these cancellations is the issue of affordability.
In June, the median home sale price hit a staggering $442,525, while the average interest rate for a 30-year mortgage reached 6.92%. Alongside the elevated home prices and persistent mortgage rates, prospective buyers are also contending with increased costs related to insurance, property taxes, HOA fees, and other expenses affected by inflation.
This overall lack of affordability has contributed to a significant decline in home sales across the country, with Redfin noting that June saw the largest drop in home sales in eight months. On a month-to-month basis, sales decreased by 0.5%, the steepest decline since October 2023. Year-over-year, home sales fell by 1.1% and remained 21.5% below pre-pandemic levels.