Realtors are experiencing an increase in buyers backing out of home purchase agreements, as potential buyers become more selective in a challenging real estate market.
A recent report from Redfin revealed that nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract that month. This marks the highest percentage recorded for any 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 hesitant due to the expense associated with current market conditions. “They’re backing out over minor issues because the monthly costs related to buying a home today are too high to overlook any shortcomings on their must-have list,” Zubiate noted.
In Miami, agent Rafael Corrales described some extreme cases, including last-minute cancellations over trivial matters. The area saw approximately 2,500 canceled home purchases in June, representing around 17.6% of contracts. However, Corrales emphasized that the main concern among buyers is affordability.
The median home sale price reached a new high of $442,525 in June, while the average rate for a 30-year mortgage stood at 6.92%. In addition to rising home prices and elevated mortgage rates, potential buyers are facing higher costs related to insurance, property taxes, HOA fees, and other expenses linked to homeownership, all of which have been aggravated by inflation.
The overall lack of affordability in the housing market has led to the biggest decline in home sales seen in eight months. According to Redfin, home sales decreased by 0.5% in June, marking the largest drop since October 2023. On a yearly basis, home sales fell by 1.1% and were 21.5% below pre-pandemic levels.