Realtors are encountering 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 report by Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This figure marks the highest percentage recorded for June by the company.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in canceled contracts to buyers who are more discerning in the face of rising costs. She noted that potential homeowners are opting out over minor issues because the financial implications of purchasing a home are too substantial to overlook without meeting all their criteria.
Rafael Corrales, a Redfin agent based in Miami, described witnessing numerous last-minute cancellations due to insignificant details. In Miami alone, around 2,500 home purchases were abandoned in June, accounting for about 17.6% of homes that were under contract. Corrales identified affordability as the primary concern for buyers.
The median home sale price in June hit a record high of $442,525, with the average rate for a 30-year mortgage reaching 6.92%. Buyers are further burdened by additional costs such as insurance, property taxes, and homeowners association fees, all of which have been worsened by inflation.
The national decline in affordability has led to a significant decrease in home sales, the largest seen in eight months, according to Redfin. Month over month, home sales dropped by 0.5% in June, marking the steepest decline since October 2022. Year-over-year, there was a 1.1% decrease in home sales, with numbers standing 21.5% below pre-pandemic levels.