Realtors are facing a surge in buyers who are backing out of home purchase agreements, as increased selectivity emerges in a challenging real estate market.
According to a report from Redfin released on Tuesday, nearly 56,000 home-purchase agreements fell through in June, representing 15% of all homes that went under contract during that month. This marks the highest percentage recorded for any June in the site’s history.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributes this trend to pickier buyers who are struggling with high costs in the market. She reported that many buyers are retreating over minor issues since the financial ramifications of home buying are daunting without meeting all their requirements.
In Miami, Redfin agent Rafael Corrales described witnessing “nightmare scenarios” where buyers cancel deals due to trivial details. Last month alone, approximately 2,500 home purchases were canceled in Miami, amounting to around 17.6% of homes that were under contract in June. Corrales emphasized that affordability remains the most significant challenge.
The median home sale price hit a record high of $442,525 in June, with the average 30-year mortgage rate at 6.92%. Besides the elevated home prices and still-high mortgage rates, potential buyers are also contending with various additional costs such as insurance, property taxes, and homeowners association fees, all of which have been impacted by inflation.
This affordability crisis is leading to the sharpest decline in home sales in eight months, as reported by Redfin. Home sales decreased by 0.5% in June compared to the previous month—the most significant drop since October 2023. Year over year, home sales have fallen 1.1% and are 21.5% lower than levels seen before the pandemic.