Realtors are facing an unprecedented rise in buyers backing out of home purchase agreements, as potential homeowners become more selective amid challenging market conditions.
According to a report from Redfin released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, equating to 15% of all homes that went under contract that month. This marks the highest cancellation rate for June recorded by the real estate company.
Julie Zubiate, a real estate agent from Redfin Premier in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are hesitant due to rising 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.
In Miami, Redfin agent Rafael Corrales reported witnessing extreme scenarios, including last-minute cancellations over trivial matters. In June alone, approximately 2,500 home purchases were canceled in Miami, amounting to about 17.6% of homes under contract. Corrales pointed out that the primary challenge remains affordability.
The median home sale price reached a record $442,525 in June, with the average 30-year mortgage rate at 6.92%. Alongside the high home prices and elevated mortgage rates, potential buyers are also contending with increased expenses related to insurance, property taxes, HOA fees, and other costs tied to homeownership that have been intensified by inflation.
This growing lack of affordability has led to a notable decline in home sales nationwide, representing the steepest drop in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, marking the largest decline since October 2023. Year-over-year, home sales dropped by 1.1% and were 21.5% lower than pre-pandemic levels.