Realtors are experiencing an increase in buyers backing out of home purchases, as consumers become increasingly selective in the challenging real estate market.
According to a recent report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, which accounts for 15% of all homes that entered into contract that month. This marks the highest cancellation rate for June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributes the surge in cancellations to buyers being more discerning in a market where prices are high. “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.
In Miami, fellow Redfin agent Rafael Corrales reported witnessing “nightmare scenarios” with last-minute cancellations due to minor details. Approximately 2,500 home purchases were scrapped in Miami last month, representing about 17.6% of homes under contract in June. Corrales noted that the primary concern is affordability.
The median home sale price hit an all-time high of $442,525 in June, while the average interest rate on a 30-year mortgage stood at 6.92%. Potential home buyers are facing not just elevated home prices and interest rates but also rising costs from insurance, property taxes, and HOA fees, all intensified by inflation.
This ongoing affordability crisis has led to the most significant downturn in home sales in eight months, according to Redfin. Monthly sales decreased by 0.5% in June, marking the largest decline since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% lower than levels observed before the pandemic.