Real estate agents are reporting a significant increase in buyers backing out of home purchase agreements as they become more selective in a challenging market. According to a report from Redfin, nearly 56,000 home-purchase contracts fell through in June, accounting for 15% of all homes that went under contract during that month. This marks the highest percentage of failed agreements for June on record.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers being deterred by high monthly 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,” she explained.
In Miami, Rafael Corrales, another Redfin agent, noted that he has encountered “nightmare scenarios” involving last-minute cancellations over minor details. In June, approximately 2,500 home purchases were canceled in Miami, representing about 17.6% of homes that went under contract. Corrales emphasized that affordability remains the primary concern for buyers.
The median home sale price reached an all-time high of $442,525 in June, with the average rate for a 30-year mortgage hitting 6.92%. In addition to elevated home prices and mortgage rates, prospective buyers are also struggling with rising insurance, property taxes, and homeowners association fees, all compounded by inflation.
The nationwide affordability crisis has led to the steepest decline in home sales in eight months, according to Redfin. Home sales fell by 0.5% month-over-month in June, marking the largest drop since October 2023. Year-over-year, sales decreased by 1.1% and remain 21.5% below pre-pandemic levels.