Realtors are experiencing a surge in buyers backing out of home purchase agreements, as a more selective clientele navigates a challenging real estate landscape.
According to a report from Redfin, nearly 56,000 home purchase agreements were terminated in June, representing 15% of all homes that went under contract that month—the highest rate for June recorded by the platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are now increasingly particular about their requirements. “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 stated.
In Miami, another Redfin agent, Rafael Corrales, noted that he has witnessed “nightmare scenarios” with last-minute cancellations over minor details. Approximately 2,500 home purchases were canceled in Miami last month, which equates to about 17.6% of homes under contract in June. Corrales emphasized that affordability remains the core issue.
June also brought a record median home sale price of $442,525, alongside an average interest rate of 6.92% on 30-year mortgages. Prospective home buyers are further burdened by rising insurance costs, property taxes, HOA fees, and other homeownership-related expenses, all of which have been intensified by inflation.
This prevailing affordability crisis has led to a notable drop in home sales nationwide, marking the steepest decline in eight months, as reported by Redfin. Month over month, home sales fell by 0.5% in June—the largest decrease since October 2022. Year over year, home sales experienced a decline of 1.1% and were found to be 21.5% lower than pre-pandemic levels.