Realtors are experiencing an unprecedented number of buyers backing out of home purchases as individuals become more selective in a challenging real estate market.
According to a report by Redfin, nearly 56,000 home purchase agreements did not go through in June, representing 15% of all homes that went under contract during that month. This marks the highest percentage for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this increase in cancellations to a more discerning buyer who is facing a costly market. “They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to rationalize not getting everything on their must-have list,” Zubiate remarked.
Rafael Corrales, a Redfin agent in Miami, reported witnessing “nightmare scenarios,” including last-minute drops over trivial details. Last month, around 2,500 home purchases were canceled in Miami, accounting for about 17.6% of homes that went under contract in June. Corrales noted that the main issue remains affordability.
In June, the median home sale price surged to a record $442,525, while the average rate for a 30-year mortgage hit 6.92%. In addition to high home prices and elevated mortgage rates, potential buyers are also facing increased insurance, property taxes, HOA fees, and other homeownership costs that have risen due to inflation.
This lack of affordability has contributed to the largest drop in home sales in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, marking the most significant decline since October 2023. Year-over-year, home sales fell by 1.1% and are 21.5% lower than pre-pandemic figures.