Real estate agents are encountering a surge in buyers backing out of home purchase agreements, as prospective homeowners become increasingly selective in a challenging market.
In June, nearly 56,000 home purchase agreements were canceled, accounting for 15% of all homes that went under contract, marking the highest percentage recorded for that month by Redfin.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributes the rise in withdrawals to buyers feeling the pressure of high costs 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,” she stated.
Similarly, Rafael Corrales, a Redfin agent in Miami, shared that he has witnessed numerous last-minute cancellations over trivial matters. In Miami alone, about 2,500 home purchases were canceled in June, which represents approximately 17.6% of homes under contract that month. He emphasized that the major concern among buyers remains affordability.
The median home sale price in June reached an all-time high of $442,525, while the average rate on a 30-year mortgage was pegged at 6.92%. In addition to elevated home prices and ongoing high mortgage rates, potential buyers are also contending with rising insurance, property taxes, homeowners association fees, and the overall costs associated with homeownership that have intensified due to inflation.
This affordability crisis has led to a notable decline in home sales across the nation, with Redfin reporting the most significant drop in eight months. Monthly home sales saw a decrease of 0.5% in June, the largest decline since October 2023. Year-over-year, home sales dropped by 1.1% and were 21.5% below pre-pandemic levels.