Realtors are facing an unprecedented number of buyers withdrawing from home purchases as potential homeowners become increasingly selective in a challenging real estate environment.
According to a Redfin report released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract that month. This marks the highest percentage of failed contracts recorded in June by the real estate website.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the uptick in withdrawn offers to buyers who are struggling with rising costs and are unwilling to compromise on their wishes.
“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.
Rafael Corrales, a Redfin agent in Miami, described extreme cases where buyers cancel agreements at the last minute over trivial matters. In Miami alone, around 2,500 home purchases were canceled last month, constituting approximately 17.6% of homes that went under contract in June. Corrales pointed out that the primary concern for many buyers is affordability.
In June, the median home sale price reached a record high of $442,525, while the average rate on a 30-year mortgage stood at 6.92%. Alongside the elevated home prices and persistent mortgage rates, potential buyers are also facing escalating costs associated with homeownership, including insurance, property taxes, HOA fees, and other expenses driven up by inflation.
The growing lack of affordability has led to a significant decline in home sales across the nation, which have seen their most substantial drop in eight months, according to Redfin. Monthly home sales declined by 0.5% in June, marking the largest decrease since October 2023. Furthermore, year-over-year sales decreased by 1.1% and remain 21.5% below pre-pandemic levels.