Realtors are facing an increase in buyers withdrawing from home purchase agreements as the real estate market becomes more challenging and buyers more selective.
A recent report from Redfin revealed that nearly 56,000 home-purchase agreements collapsed in June, representing 15% of all homes that went under contract that month. This marks the highest percentage recorded for June by the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in buyer hesitance to individuals becoming more particular in a tough market. She noted that buyers are backing out over minor issues, as the costs associated with purchasing a home have risen to levels that make it difficult to forgo any desired features.
Rafael Corrales, a Redfin agent in Miami, recounted “nightmare scenarios” involving last-minute cancellations over trivial details. In Miami, approximately 2,500 home purchases were canceled in June, equating to around 17.6% of homes under contract that month. He emphasized that the core issue lies in affordability.
June saw the median home sale price reach an all-time high of $442,525, coupled with a 30-year mortgage rate averaging 6.92%. In addition to the elevated home prices and mortgage rates, potential buyers are also burdened by insurance costs, property taxes, HOA fees, and various expenses related to homeownership, all worsened by inflation.
The affordability crisis has led to a significant decline in home sales nationwide, with Redfin reporting the largest drop in eight months. Home sales experienced a 0.5% decrease in June compared to the previous month, marking the most significant decline since October 2023. Year-over-year, home sales fell by 1.1%, and they remain 21.5% below pre-pandemic levels.