Realtors are experiencing an unprecedented surge in buyers backing out of home purchases as consumers grow more selective in a challenging real estate market.
In June, nearly 56,000 home-purchase agreements fell through, which represents 15% of all homes that were under contract that month, according to a report from Redfin. This marks the highest percentage of failed agreements for any June recorded by the platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are now more selective, struggling with rising costs in the 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.
Rafael Corrales, a Redfin agent based in Miami, reported witnessing significant last-minute cancellations often triggered by small details. In June, about 2,500 home sales were canceled in Miami, amounting to 17.6% of homes that went under contract. However, Corrales emphasized that the primary concern continues to be affordability.
The median home sale price surged to a record $442,525 in June, while the average 30-year mortgage rate reached 6.92%. In addition to the elevated home prices and mortgage rates, potential buyers are also burdened by rising costs related to insurance, property taxes, HOA fees, and various other expenses associated with homeownership, further strained by inflation.
The nationwide decline in affordability has led to a notable decrease in home sales, which saw their largest drop in eight months, according to Redfin. Monthly home sales fell by 0.5% in June, marking the steepest decline since October 2023. Year-over-year, home sales decreased by 1.1% and were down 21.5% compared to pre-pandemic levels.