Realtors are encountering an increasing number of buyers retracting their home purchase agreements as individuals become more discerning in the challenging real estate landscape.
A report from Redfin revealed that nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that entered contracts that month. This marks the highest percentage for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributes this rise in cancellations to a more selective buyer demographic struggling with the high costs associated with home buying.
“Buyers are backing out due to minor issues because the monthly expenses related to purchasing a home today are daunting, making it hard to settle for anything less than their requirements,” Zubiate stated.
Rafael Corrales, a Redfin agent in Miami, noted that he has witnessed “nightmare scenarios,” including last-minute withdrawals over insignificant details. Around 2,500 home purchases were canceled in Miami last month, translating to about 17.6% of homes that went under contract in June. However, Corrales emphasized that the major concern remains affordability.
In June, the median home sale price reached an all-time high of $442,525, while the average 30-year mortgage rate stood at 6.92%. In addition to elevated home prices and high mortgage rates, potential buyers are burdened with expenses such as insurance, property taxes, HOA fees, and other costs tied to homeownership, which have been intensified by inflation.
The pervasive lack of affordability in the real estate market has led to the most significant drop in home sales in eight months, as reported by Redfin. Monthly home sales decreased by 0.5% in June, marking the largest decline since October 2023. In comparison to the previous year, home sales fell by 1.1% and were 21.5% lower than the levels observed before the pandemic.