Realtors are facing an increasing number of buyers backing out of home purchase agreements, as customers become more selective in a challenging real estate market.
According to a report from Redfin released on Tuesday, nearly 56,000 home purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest percentage recorded for any June by the real estate company.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers who are being increasingly discerning in a costly 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,” Zubiate stated.
Rafael Corrales, another Redfin agent based in Miami, highlighted several “nightmare scenarios” involving last-minute cancellations over trivial details. In Miami alone, about 2,500 home purchases were canceled in June, making up roughly 17.6% of homes that went under contract. Corrales noted that the overarching issue remains affordability.
In June, the median home sale price reached an all-time high of $442,525, with the average rate on a 30-year mortgage at 6.92%. In addition to the high cost of homes and persistent mortgage rates, potential buyers are also grappling with rising insurance, property taxes, HOA fees, and other costs associated with ownership, all made worse by inflation.
The ongoing affordability crisis has led to a significant decline in home sales across the nation, with Redfin reporting the largest decrease in eight months. Monthly home sales saw a reduction of 0.5% in June, the steepest drop since October 2023. Year-over-year, home sales fell by 1.1%, remaining 21.5% below pre-pandemic figures.