Realtors are experiencing an unprecedented number of buyers backing out of home purchase agreements, as consumers grow more particular in a challenging real estate market.
According to a report from Redfin published on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest percentage for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this increase in cancellations to buyers being more selective, particularly given the high costs associated with home buying in the current market. “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, fellow Redfin agent Rafael Corrales reported witnessing “nightmare scenarios,” including last-minute pullouts over trivial details. Approximately 2,500 home purchases were canceled in Miami last month, accounting for roughly 17.6% of homes that went under contract in June. Corrales emphasized that the primary concern remains affordability.
The median home sale price reached an all-time high of $442,525 in June, while the average rate for a 30-year mortgage stood at 6.92%. Prospective home buyers face numerous additional expenses, including insurance, property taxes, and HOA fees, all of which have been intensified by inflation.
The overall lack of affordability in the housing market has contributed to a significant decline in home sales, marking the largest drop in eight months, as reported by Redfin. Month-over-month, home sales fell by 0.5% in June, which is the steepest decline since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic levels.