Realtors are experiencing an unprecedented wave of buyers backing out of home purchase agreements, as prospective homeowners become increasingly selective in a challenging real estate climate.
In June, nearly 56,000 home purchase contracts were abandoned, representing 15% of all homes that went under contract that month, according to a recent report by Redfin. This marks the highest cancellation rate ever recorded for June by the real estate firm.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are more discerning in the current market conditions. She noted that many are withdrawing for minor reasons, as the financial burden of homeownership has grown substantially.
“Buyers are 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,” Zubiate explained.
Rafael Corrales, another Redfin agent in Miami, reported witnessing troubling trends, including last-minute dropouts over trivial matters. In June alone, around 2,500 home purchases were canceled in Miami, translating to approximately 17.6% of homes that had gone under contract. Corrales emphasized that the primary concern for buyers is overall affordability.
The median home sale price reached a staggering $442,525 in June, while the average interest rate for a 30-year mortgage was at 6.92%. Coupled with the high prices of homes, elevated mortgage rates, and other expenses such as insurance, property taxes, and homeowners association fees—much of which has been aggravated by inflation—buyers are finding it increasingly difficult to proceed with their purchases.
The ongoing affordability crisis in the housing market has contributed to the most significant decline in home sales in eight months, according to Redfin. Monthly home sales dipped by 0.5% in June, marking the sharpest decrease since October 2023. Year-over-year, home sales fell by 1.1%, now sitting 21.5% below figures from before the pandemic.