Realtors are facing an unprecedented number of buyers backing out of home purchase agreements, as potential homeowners become increasingly selective in a challenging real estate market.
According to a Redfin report released on Tuesday, nearly 56,000 home purchase agreements were canceled in June, which represents 15% of all homes that went under contract that month. This marks the highest percentage recorded for any June by Redfin.
Julie Zubiate, a Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to a more discerning buyer demographic that is struggling with the high costs associated with home buying. “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 several “nightmare scenarios,” including last-minute cancellations over trivial details. Approximately 2,500 home purchases were abandoned in Miami last month, amounting to about 17.6% of homes that were under contract in June. Corrales emphasized that the primary concern for many buyers is affordability.
The median home sale price reached a record high of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. Buyers are further burdened by rising property insurance, taxes, homeowners association fees, and other expenses tied to homeownership, all intensified by inflation.
The widespread lack of affordability has led to a significant drop in home sales nationwide, with Redfin reporting that June experienced the largest decline in eight months. Month-over-month, home sales decreased by 0.5%, the steepest drop since October 2023. Year-over-year, home sales fell by 1.1% and were down 21.5% from pre-pandemic levels.