Realtors are experiencing an unprecedented number of buyers backing out of home purchases, as individuals become increasingly selective in a challenging real estate market.
According to a Redfin report released on Tuesday, nearly 56,000 home-purchase agreements collapsed in June, constituting 15% of all homes that went under contract that month. This marks the highest percentage of failed contracts recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers who are reconsidering their purchases due to the high costs associated with homeownership. She remarked, “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.”
In Miami, Redfin agent Rafael Corrales reported witnessing difficult situations, including last-minute withdraws over trivial matters. Last month, approximately 2,500 home purchases were canceled, representing about 17.6% of homes under contract in June. Corrales noted that the primary concern for buyers is affordability.
The median home sale price reached a historic $442,525 in June, while the average 30-year mortgage rate stood at 6.92%. In addition to the high housing prices and elevated mortgage rates, prospective buyers face escalating costs from insurance, property taxes, homeowner association fees, and other homeownership expenses, all exacerbated by inflation.
This widespread lack of affordability has led to one of the most significant declines in home sales in eight months, as reported by Redfin. Home sales fell by 0.5% in June compared to May, marking the steepest drop since October 2023. Year over year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic levels.