Realtors are currently experiencing a significant increase in buyers backing out of home purchases, as prospective homeowners become more selective amid challenging market conditions.
According to a report from Redfin, nearly 56,000 home-purchase agreements fell through in June, which represents 15% of all homes that were under contract that month. This marks the highest percentage of canceled agreements recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributes this trend to a more discerning buyer demographic that is facing rising costs in the housing 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,” she stated.
Rafael Corrales, another Redfin agent in Miami, reported experiencing “nightmare scenarios,” including last-minute cancellations over trivial details. In Miami alone, approximately 2,500 home purchases were canceled last month, which constitutes about 17.6% of the homes that went under contract in June. Corrales emphasized that the primary concern among buyers remains affordability.
The median home sale price hit a record high of $442,525 in June, while the average rate for a 30-year mortgage climbed to 6.92%. In conjunction with these elevated home prices and ongoing high mortgage interest rates, potential buyers are also facing challenges from rising insurance costs, property taxes, homeowner association fees, and other expenses associated with homeownership, which have been further impacted by inflation.
The overall lack of affordability in the housing market has led to the largest decline in home sales in eight months, as reported by Redfin. On a monthly basis, home sales dropped by 0.5% in June, marking the most significant decrease since October 2023. Year-over-year, home sales fell by 1.1% and remain 21.5% below pre-pandemic levels.