Realtors are facing an unprecedented number of buyers backing out of home purchase agreements, as buyers become increasingly selective in the current challenging real estate environment.
According to a report by Redfin, nearly 56,000 home-purchase agreements were canceled in June, constituting 15% of all homes that went under contract during that month. This marks the highest percentage 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 buyers who are being more discerning amidst escalating costs in the market. “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 remarked.
Similarly, Rafael Corrales, a Redfin agent in Miami, reported experiencing “nightmare scenarios,” where last-minute withdrawals occurred over minor details. In Miami alone, approximately 2,500 home purchases were canceled last month, amounting to roughly 17.6% of homes that were under contract in June. Corrales noted that the main concern remains affordability.
The median home sale price hit a record $442,525 in June, with the average rate for a 30-year mortgage reaching 6.92%. In addition to high home prices and enduring mortgage rates, potential buyers are also facing increased burdens from insurance, property taxes, HOA fees, and other costs tied to homeownership, all of which have been worsened by inflation.
This lack of affordability has led to a significant decline in home sales nationwide, with Redfin indicating that sales declined by 0.5% in June compared to the previous month — the most substantial drop since October 2022. Year-over-year, home sales fell by 1.1% and are now 21.5% lower than pre-pandemic levels.