Realtors are facing an unprecedented number of buyers backing out of home purchase agreements as consumer preferences shift in a challenging real estate market.
In June, nearly 56,000 purchase agreements were canceled, amounting to 15% of all homes that went under contract that month, as reported by Redfin. This marks the highest cancellation rate recorded for June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in buyer withdrawals to their growing selectiveness in a costly market. “They’re backing out over minor issues because the monthly costs associated with buying a home today are just too high to ignore the need for everything on their must-have list,” she stated.
Rafael Corrales, a Redfin agent in Miami, reflected on the challenging scenarios he has witnessed, including last-minute cancellations for trivial reasons. In June, roughly 2,500 home purchases in Miami were called off, representing about 17.6% of homes that went under contract that month. Corrales emphasized that the primary concern remains the affordability of homes.
The median sale price of homes hit a record high of $442,525 in June, while the average interest rate for a 30-year mortgage reached 6.92%. Prospective buyers are grappling with not only high home prices but also elevated mortgage rates, insurance costs, property taxes, HOA fees, and other expenses associated with homeownership, all exacerbated by ongoing inflation.
Nationwide affordability issues have led to a significant drop in home sales, which saw their largest decline in eight months. According to Redfin, home sales fell by 0.5% in June, the steepest decrease since October 2023. Year-over-year sales were down by 1.1%, representing a staggering 21.5% drop compared to levels before the pandemic.