Realtors are experiencing an unprecedented number of buyers walking away from home purchase agreements, as individuals become more selective amidst a challenging real estate environment.
According to a recent report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that were under contract during that month. This figure marks the highest percentage recorded for any June in the history of the real estate site.
Julie Zubiate, a real estate agent with Redfin Premier in the San Francisco Bay Area, attributes the increase in cancellations to buyers who are more discerning due to heightened costs in the housing market. She noted that buyers are backing out over minor issues, as the monthly expenses associated with purchasing a home are high enough that they are unwilling to compromise on their essential requirements.
Rafael Corrales, another Redfin agent based in Miami, reported witnessing “nightmare scenarios” involving last-minute cancellations for trivial reasons. In Miami alone, about 2,500 home purchases were called off last month, which accounts for approximately 17.6% of homes that entered contracts in June. Corrales emphasized that the primary concern is affordability.
The median sale price for homes hit a record high of $442,525 in June, while the average interest rate on a 30-year mortgage reached 6.92%. In addition to elevated home prices and high mortgage rates, prospective buyers are also facing increased expenses from insurance, property taxes, homeowners’ association fees, and other costs linked to homeownership, all of which have been impacted by inflation.
These affordability challenges have resulted in the largest monthly decline in home sales in eight months, as reported by Redfin. Sales decreased by 0.5% in June, the most significant drop since October 2023. Year-over-year, home sales declined by 1.1% and are currently 21.5% below pre-pandemic levels.