Realtors are experiencing a significant increase in buyers backing out of home purchases, as consumers become more discerning in a challenging real estate environment.
A recent report from Redfin revealed that nearly 56,000 home purchase agreements were canceled in June, representing 15% of all homes that went under contract during the month. This marks the highest cancellation rate for June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers becoming more selective while 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 explained.
Additionally, Rafael Corrales, a Redfin agent in Miami, noted witnessing “nightmare scenarios” of last-minute cancellations over trivial details. In Miami alone, around 2,500 home purchases were called off in June, accounting for approximately 17.6% of contracts. Corrales highlighted that the core issue affecting potential buyers is affordability.
With the median home sale price reaching an all-time high of $442,525 in June and the average 30-year mortgage rate at 6.92%, prospective buyers are facing mounting expenses. These include not just the high cost of homes but also insurance, property taxes, HOA fees, and other ownership-related costs that have been worsened by inflation.
The nationwide affordability crisis has resulted in the most substantial decline in home sales seen in eight months, according to Redfin. Home sales fell by 0.5% from the previous month, marking the largest decrease since October 2023. Year over year, sales dropped by 1.1% and are now 21.5% lower than levels seen before the pandemic.