Realtors are encountering an increasing number of buyers who are backing out of home purchases, as potential homeowners grow more discerning in the current challenging real estate market.
Data from a Redfin report indicates that nearly 56,000 home purchase agreements fell through in June, representing 15% of all homes that were under contract that month. This marks the highest percentage recorded for any June since the inception of the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers who are being more selective due to high market costs. She noted that many are withdrawing for minor reasons, as the monthly expenses associated with purchasing a home have become difficult to justify without meeting all their essential criteria.
Rafael Corrales, a Redfin agent in Miami, recounted dramatic late-stage cancellations over minor issues, reporting that around 2,500 home purchases were canceled in Miami last month, accounting for approximately 17.6% of homes under contract. He highlighted that the primary concern is affordability.
In June, the median home sale price hit a record high of $442,525, accompanied by an average 30-year mortgage rate of 6.92%. In addition to soaring home prices and elevated mortgage rates, potential buyers are also grappling with rising insurance costs, property taxes, HOA fees, and other expenses linked to homeownership, all of which have been worsened by inflation.
The national affordability crisis has led to a significant decline in home sales, marking the largest drop in eight months, according to Redfin. Home sales decreased by 0.5% month-over-month in June, the most substantial decline since October 2023. Year-over-year, sales fell by 1.1% and are currently 21.5% below pre-pandemic levels.