SEATTLE – (By Dale King, Realty News Report) — Nearly 56,000 home purchase agreements were canceled in June, representing 14.9 percent of all properties that went under contract just before or during the start of summer. According to a newly released report from Seattle-based brokerage Redfin, this was the largest share of last-minute buyer withdrawals for any June on record.
“Buyers are becoming increasingly selective,” said Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area. “Many are walking away over relatively minor issues because the monthly costs of homeownership now make it hard to accept anything short of their full must-have list.”
Redfin’s analysis found that rising prices and higher borrowing costs are straining buyers’ commitments. The median home sale price climbed 4 percent year over year to a record $442,525 in June, while the average 30-year mortgage rate was 6.92 percent. Although that rate is slightly lower than May’s 7.06 percent, it remains far above the historic lows seen during the pandemic.
Some markets saw especially high cancellation rates. Orlando led the 50 most-populated U.S. metros with about 900 terminated contracts in June — 20.8 percent of homes that went under contract that month. Jacksonville and Tampa followed at 20.5 percent each, with Las Vegas at 20.2 percent and San Antonio at 19.9 percent.
“We’re seeing nightmare scenarios where deals collapse at the last minute for very small reasons,” said Rafael Corrales, a Redfin Premier agent in Miami. About 2,500 prospective home purchases were canceled there in June, equal to 17.6 percent of contracts initiated that month.
Corrales noted that buyers commonly back out during inspection periods when they discover issues, but he emphasized that affordability is the core problem. “I don’t want my clients surprised by the ongoing costs of owning a home in Florida,” he said. “I advise them to research expected insurance premiums, property taxes and HOA fees, in addition to their mortgage payment.”
June also saw a high share of homes sell only after price reductions. Nearly one in five homes sold that month (19.8 percent) sold following a price cut — the highest share for any June on record. That share was up from 14.4 percent a year earlier and approached the October 2022 peak of 21.7 percent.
Home sales declined 0.5 percent month over month in June on a seasonally adjusted basis, the largest monthly drop since October 2023. Sales were down 1.1 percent from a year earlier and 21.5 percent below pre-pandemic June 2019 levels.
Redfin attributes sluggish sales to affordability constraints. Even as mortgage rates eased slightly in June (and continued to tick down afterward), many buyers remain sidelined, hoping rates will fall further.
Redfin Economics Research Lead Chen Zhao warned that rates are unlikely to drop significantly in the coming months and said that markets have largely already priced in a potential September rate cut.
Highlights from the June 2024 Redfin report:
- Prices: Median sale prices rose most year over year in Anaheim, Calif. (13.2 percent), Newark (12.6 percent) and Nassau County, N.Y. (12 percent). Prices fell in four Texas metros: Austin (-5.5 percent), Dallas (-1.6 percent), San Antonio (-1.3 percent) and Fort Worth (-0.2 percent).
- Price cuts: Indianapolis had the largest share of listings with price drops at 49.2 percent, followed by Denver (46.6 percent) and Tampa (43 percent). The lowest shares were in Newark (15.2 percent), Chicago (16.3 percent) and Milwaukee (17 percent).
- Active listings: Active inventory rose most in Florida metros — Tampa (47 percent), Fort Lauderdale (45.3 percent) and Orlando (41.4 percent). It fell the most in the Chicago area (about -7.4 percent), New Brunswick, N.J. (-7 percent) and New York (-5.8 percent).
Aug. 12, 2024 Realty News Report Copyright 2024
Photo credit: Cynthia Lescalleet, CALPix, Copyright 2024, Realty News Report.
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