Realtors are experiencing a surge in buyers backing out of contracts, as potential homeowners become increasingly selective in a challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract during that month. This represents the highest percentage recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes this trend to a more discerning buyer demographic that is struggling with high market prices. She stated, “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.”
Rafael Corrales, another Redfin agent based in Miami, reported witnessing challenging situations where buyers cancel at the last minute over trivial matters. In Miami alone, around 2,500 home purchases were scrapped in June, which corresponds to approximately 17.6% of homes that went under contract that month. Corrales emphasized that affordability remains the primary concern for buyers.
In June, the median home sale price hit a record high of $442,525, coupled with an average 30-year mortgage rate of 6.92%. In addition to rising home prices and consistently high mortgage rates, potential buyers are also facing additional expenses including insurance, property taxes, and HOA fees, all of which have been impacted by inflation.
This widespread lack of affordability has led to a significant decline in home sales across the nation. Redfin reports that home sales fell by 0.5% month-over-month in June, marking the largest decrease since October 2023. Compared to the same month last year, home sales dropped 1.1% and were 21.5% lower than pre-pandemic levels.