Realtors are facing an increasing number of buyers backing out of home purchase agreements, as consumers become more selective in a challenging real estate market.
A report by Redfin indicates that nearly 56,000 home-purchase agreements failed to finalize in June, accounting for 15% of all homes under contract that month, marking the highest percentage recorded for a June.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed this rise in cancellations to buyers becoming more discerning, particularly in the face of a market where homeownership costs have surged. She noted that buyers are withdrawing over minor issues, as the monthly expenses tied to buying a home have reached levels that make it difficult to overlook any shortcomings on their must-have lists.
Similarly, Rafael Corrales, a Redfin agent in Miami, highlighted various last-minute cancellations that have occurred due to trivial details. In June alone, approximately 2,500 home purchases were abandoned in Miami, representing about 17.6% of all homes that went under contract that month. Corrales pointed to affordability as the primary concern driving these cancellations.
The median home sale price set a new high of $442,525 in June, while the average rate for a 30-year mortgage rose to 6.92%. In addition to these steep home prices and elevated mortgage rates, potential buyers are also encountering challenges from rising insurance costs, property taxes, and HOA fees, all of which have been aggravated by inflation.
This lack of affordability has significantly impacted home sales, leading to their most significant decline in eight months. Redfin reported a 0.5% drop in monthly home sales for June, the largest decrease since October 2023. Comparatively, home sales saw a year-over-year decline of 1.1% and were 21.5% lower than pre-pandemic figures.