“Record Home Buyer Contract Cancellations in June 2024”

The latest housing market report from Redfin reveals a significant trend: buyers are increasingly backing out of home purchase agreements. In June, 56,000 purchase agreements were canceled, accounting for 14.9% of homes that went under contract. This is the highest percentage for any June on record and the highest level seen this year.

Record-High Home Prices and Elevated Mortgage Rates Prompt Buyer Cancellations

The latest housing market report from Redfin reveals a significant trend: buyers are increasingly backing out of home purchase agreements. In June, 56,000 purchase agreements were canceled, accounting for 14.9% of homes that went under contract. This is the highest percentage for any June on record and the highest level seen this year.

However, this isn’t the highest percentage ever recorded. In March 2020, during the onset of the COVID-19 pandemic, 16.6% of purchase agreements were canceled. Similar high cancellation rates were observed in October 2022 and October 2023, both exceeding 16%.

Redfin agent Julie Zubiate explains, “Buyers are becoming more selective. They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to justify not getting everything on their must-have list.”

Despite the rapidly rising inventory, high prices and mortgage rates continue to deter buyers. Many are waiting for the Federal Reserve to lower benchmark rates, which is anticipated to happen in September.

Housing markets that experienced a surge in activity post-pandemic are now seeing the highest cancellation rates.

Among the 50 most populous state metro areas, three Florida metros topped the list in June:

Orlando (20.8%)
Jacksonville (20.5%)
Tampa (20.5%)

Las Vegas (20.2%)

San Antonio (19.9%) also had high cancellation rates

Miami-based Redfin agent Rafael Corrales shares, “We’re seeing nightmare scenarios where deals are getting canceled at the last minute for the smallest reasons. In my market, 17.6% of buyers canceled in June.”

Corrales adds, “Buyers often back out during the inspection period because they find something they don’t like, but affordability is the real issue. I advise my buyers to proactively research the hefty costs of insurance, property taxes, and HOA fees, in addition to their mortgage payments, to avoid surprises.”

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I wanted a more narrowed and localized percentage for my immediate market area here in the Great Smoky Mountains of East Tennessee where our Sale-Fail rate varies due to an over population of overnight rental cabins for sale.

When looking at the current MLS data for June, our Sevier County Tn real estate market experienced slightly over 3% Sale-Fail rate in the residential sector, which includes overnight properties.

As shown below, we had 49 Back on Market residential listings in June.

However, Looking at the entire current year from Jan 1 to June 30, Data shows 143 BOM (Back on Market) properties out of 44,493 total active listings.

Navigating the Waves of Change in East Tennessee’s Real Estate Market

We find ourselves in another challenging real estate period, but don’t lose faith! The market is ever-changing, and with every challenge comes an opportunity. As we look forward to the November election, hopes of relief bloom like ragweed in the spring. While staying optimistic about the future of our current market can be daunting at times, it’s essential to remember that this is the hand we’ve been dealt. We have to either play the game or fold.

Having personally navigated the turbulent waters of the ’08 economic crisis, I gained invaluable on-the-job training. What I learned is that real estate is an ever-evolving machine, comprised of many moving parts. One such part is the public’s perception and confidence in the market.

Despite the current challenges, there are always opportunities for those who stay informed and adaptable. The East Tennessee real estate market is no exception. By staying updated on the latest trends and developments, you can make informed decisions and seize opportunities as they arise.

Don’t lose faith in the real estate industry. Instead, stay engaged and informed. Subscribe to this blog for regular updates about the ever-changing real estate market in East Tennessee. Together, we can navigate these waves of change and emerge stronger on the other side.

^{Homebuyers Backed Out of Deals at a Record Rate in June (redfin.com)}