Realtors are experiencing an unprecedented number of buyers withdrawing from home purchase contracts, as consumers become more selective in the current challenging real estate environment.
A report released by Redfin indicates that nearly 56,000 home purchase agreements were canceled in June, accounting for 15% of all homes that entered contracts that month. This marks the highest percentage recorded for June on the platform.
Julie Zubiate, a Redfin Premier realtor based in the San Francisco Bay Area, attributes the increased cancellations to buyers who are more discerning in a market characterized by steep prices. “They are backing out over minor issues because the monthly financial commitments associated with purchasing a home are simply too sizable to justify not securing everything on their must-have list,” Zubiate explained.
Rafael Corrales, a Redfin agent in Miami, echoed these sentiments, noting that he has witnessed “nightmare scenarios” where buyers cancel deals at the last moment due to small concerns. In Miami alone, approximately 2,500 home purchases were canceled in June, representing about 17.6% of contracts in the area. Corrales highlighted that the primary challenge is affordability.
The median home sale price soared to a record high of $442,525 in June, with the average interest rate on a 30-year mortgage at 6.92%. In addition to the elevated prices, prospective homebuyers are faced with mounting costs including insurance, property taxes, and homeowners association fees, all of which have been further strained by inflation.
This lack of affordability has contributed to a significant decline in home sales nationwide, marking the largest drop in eight months according to Redfin. Monthly sales fell by 0.5% in June, which is the steepest decrease since October 2023. Year-over-year, home sales declined by 1.1%, falling 21.5% below levels seen before the pandemic.