Realtors are experiencing a rise in buyers backing out of home purchases as the real estate market becomes increasingly challenging. According to a report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract during that month. This is the highest percentage recorded for June by the real estate platform.
Julie Zubiate, a real estate agent with Redfin in the San Francisco Bay Area, attributes the increase in cancellations to a more discerning buyer pool that is struggling with affordability. She noted that buyers are often pulling out over minor issues, as the financial commitments of purchasing a home have become difficult to justify without meeting their requirements.
Rafael Corrales, a Redfin agent in Miami, described “nightmare scenarios” where buyers back out last minute due to trivial details. In Miami, approximately 2,500 home purchases were canceled in June, making up about 17.6% of homes that went under contract. Corrales pointed out that the primary challenge continues to be affordability.
The median home sale price reached a historic high of $442,525 in June, coupled with an average 30-year mortgage rate of 6.92%. In addition to soaring home prices and high mortgage rates, potential buyers are also facing challenges from increasing costs associated with homeownership, such as insurance, property taxes, and homeowner association fees, all worsened by inflation.
The nationwide affordability crisis has led to a significant drop in home sales, marking the most considerable decline in eight months. Redfin reported a 0.5% decrease in home sales for June on a monthly basis, the largest drop since October 2022, while year-over-year sales fell by 1.1% and were down 21.5% compared to pre-pandemic levels.