Real estate agents are encountering more buyers backing out of agreements than ever, as individuals become more selective in a challenging housing market.
According to a recent Redfin report, nearly 56,000 home-purchase agreements fell through 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 platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the increase in cancellations to buyers being more discerning, particularly due to the elevated costs of home ownership.
“Buyers are backing out over minor issues because the monthly costs tied to purchasing a home today are simply too high to justify not getting everything on their must-have list,” Zubiate stated.
Rafael Corrales, a Redfin agent in Miami, noted that he has witnessed troubling situations, including last-minute cancellations over minor details. In Miami, about 2,500 home purchases were canceled last month alone, constituting around 17.6% of homes that went under contract in June. He emphasized that the core issue is the affordability of homes.
The median sale price of homes reached an all-time high of $442,525 in June, while the average rate for a 30-year mortgage stood at 6.92%. Alongside the high home prices and elevated mortgage rates, potential homeowners are also facing burdens from insurance, property taxes, HOA fees, and other expenses related to home ownership, which have been further aggravated by inflation.
The affordability crisis in the housing market nationwide has led to the most significant decline in home sales in eight months, as reported by Redfin. Monthly home sales saw a decrease of 0.5% in June, marking the largest drop since October 2023. On an annual basis, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.