Realtors are facing a significant increase in the number of buyers backing out of home purchase agreements as consumers grow more selective in a challenging real estate market. A report from Redfin reveals that nearly 56,000 home-purchase agreements were canceled in June, representing 15% of homes that went under contract, marking the highest percentage recorded for any June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers’ hesitations stemming from high monthly costs. She noted that buyers are often reconsidering their decisions due to minor issues, as the financial commitments associated with purchasing a home have intensified.
Rafael Corrales, a Redfin agent in Miami, reported witnessing troubling situations with numerous last-minute cancellations tied to small details. In Miami, approximately 2,500 home purchases were canceled last month, accounting for about 17.6% of properties that were under contract. Corrales emphasized that the core problem is overall affordability in the market.
The median home sale price hit a record high of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. Prospective buyers are now not only facing high home prices and mortgage rates but also grappling with additional expenses such as insurance, property taxes, HOA fees, and other costs tied to homeownership, all of which have been affected by inflation.
These affordability challenges have led to the steepest decline in home sales in eight months, according to Redfin. Home sales fell by 0.5% in June compared to the previous month, the most significant drop since October 2022. Year-over-year, home sales declined by 1.1% and were down 21.5% compared to pre-pandemic levels.