Realtors are facing an unprecedented number of buyers backing out of home purchase agreements, as individuals become more selective in a challenging real estate market.
According to a recent report from Redfin, nearly 56,000 home-purchase agreements were abandoned in June, representing 15% of all homes that went under contract that month. This marks the highest percentage recorded for the month of June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers exercising caution amid rising 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,” Zubiate explained.
Rafael Corrales, a Redfin agent based in Miami, has witnessed “nightmare scenarios” of last-minute cancellations over trivial details. In June, around 2,500 home purchases were canceled in Miami, amounting to about 17.6% of homes that went under contract that month. Corrales emphasized that the primary concern for buyers is affordability.
The median home sale price hit a record high of $442,525 in June, while the average rate on a 30-year mortgage rose to 6.92%. In addition to high listing prices and elevated mortgage rates, potential homeowners are also burdened by soaring insurance, property taxes, HOA fees, and other associated costs, all intensified by inflation.
This affordability crisis has contributed to the most significant decline in home sales nationwide in the past eight months. Redfin reports a 0.5% monthly decrease in home sales for June, the largest drop since October 2023. Year-over-year, home sales dropped 1.1% and are currently 21.5% below levels observed before the pandemic.