Realtors are experiencing a notable increase in buyers backing out of home purchase agreements, as individuals become more discerning in a challenging real estate environment.
According to a Redfin report released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest percentage of cancellations recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to a more selective buyer demographic facing 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 stated.
Rafael Corrales, another Redfin agent based in Miami, reported “nightmare scenarios” where last-minute cancellations occur over minor details. In June, approximately 2,500 home purchases were canceled in Miami, accounting for around 17.6% of homes under contract. Corrales highlighted that affordability remains the primary concern for buyers.
The median home sale price hit a record high of $442,525 in June, while the average interest rate for a 30-year mortgage stood at 6.92%. In addition to elevated home prices and ongoing high mortgage rates, potential buyers are also contending with increased costs related to insurance, property taxes, HOA fees, and other expenses tied to homeownership, all of which have been intensified by inflation.
This affordability crisis has led to a significant decrease in home sales across the nation, with Redfin reporting the largest decline in eight months. Monthly home sales fell by 0.5% in June, marking the biggest drop since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% below pre-pandemic levels.