Realtors are encountering an unprecedented number of buyers backing out of home purchase agreements as consumers become increasingly selective in a challenging real estate market.
In June, nearly 56,000 home-purchase agreements, equating to 15% of all homes that went under contract, fell through, marking the highest percentage recorded for any June by Redfin.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the surge in cancellations to buyers’ heightened expectations amidst rising costs in the housing market. She noted, “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.”
Rafael Corrales, another Redfin agent based in Miami, reported similar trends, highlighting instances of last-minute cancellations over trivial details. Approximately 2,500 home purchases were canceled in Miami last month, representing about 17.6% of homes that went under contract. Corrales emphasized that affordability remains the central issue for many potential buyers.
The median home sale price reached a record high of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. In addition to elevated home prices and persistent mortgage rates, buyers are contending with rising costs associated with homeownership, including insurance, property taxes, and HOA fees, all impacted by inflation.
Nationwide affordability challenges have contributed to the most significant decline in home sales in eight months, according to Redfin. On a month-to-month basis, home sales decreased by 0.5% in June, marking the largest drop since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% below pre-pandemic levels.