Realtors are experiencing an increase in buyers backing out of home purchases, a trend linked to a selective buyer base facing challenges in a tough real estate market.
A report from Redfin indicates that nearly 56,000 home-purchase agreements were canceled in June, equating to 15% of all homes going under contract that month. This marks the highest cancellation rate recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes this rise in cancellations to buyers who are becoming increasingly choosy, citing the high monthly costs associated with purchasing a home. “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,” she explained.
Rafael Corrales, a Redfin agent in Miami, noted that he has witnessed extreme cases of last-minute cancellations over trivial details, with approximately 2,500 transactions canceled in Miami alone last month, representing about 17.6% of homes under contract there. He emphasized that the primary issue is affordability.
The report highlights that the median home sale price reached an all-time high of $442,525 in June, alongside an average 30-year mortgage rate of 6.92%. In addition to high property prices and elevated mortgage rates, potential homebuyers are also facing burdens from insurance, property taxes, HOA fees, and other ownership costs, all intensified by inflation.
This growing lack of affordability has contributed to a significant decrease in home sales across the country, which have seen their largest monthly decline in eight months, according to Redfin. Sales dropped by 0.5% in June—the steepest decline since October 2023. Year-over-year comparisons show a 1.1% dip in home sales, with figures standing at 21.5% below pre-pandemic levels.