Realtors are encountering an unprecedented number of buyers withdrawing from agreements, as potential homeowners become increasingly selective amidst a challenging real estate environment.
A recent report from Redfin highlighted that nearly 56,000 home-purchase agreements fell through in June, representing 15% of all homes that were under contract that month. This marks the highest percentage for June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, pointed to a more discerning buyer demographic that is facing escalating market costs. “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,” stated Zubiate.
In Miami, fellow Redfin agent Rafael Corrales reported witnessing “nightmare scenarios” involving last-minute cancellations over trivial details. Approximately 2,500 home purchases were canceled in Miami last month, amounting to around 17.6% of homes that were under contract in June. Corrales identified affordability as the primary concern.
In June, the median home sale price hit an all-time high of $442,525, while the average rate for a 30-year mortgage stood at 6.92%. With elevated home prices and high mortgage rates, prospective buyers are also contending with increased costs related to insurance, property taxes, HOA fees, and various expenses associated with homeownership, all of which have worsened due to inflation.
The nationwide affordability crisis has resulted in a significant downturn in home sales, with Redfin reporting the largest decline in eight months. Month-over-month, home sales decreased by 0.5% in June, which is the most considerable drop since October 2022. Comparatively, year-over-year home sales fell by 1.1%, reflecting levels 21.5% lower than those seen before the pandemic.