Realtors are experiencing an unprecedented number of buyers backing out of home purchases as selectivity increases in a challenging real estate environment.
In June, nearly 56,000 home purchase agreements were canceled, representing 15% of all homes that went under contract that month, according to a recent report from Redfin. This figure marks the highest percentage recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers being more selective as they navigate 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 commented.
Rafael Corrales, another agent from Redfin based in Miami, reported witnessing “nightmare scenarios,” including last-minute cancellations over trivial matters. Miami saw around 2,500 canceled home purchases in June, equating to approximately 17.6% of homes that went under contract. Corrales emphasized that the primary challenge is affordability.
The median sale price for homes reached a record high of $442,525 in June, with the average 30-year mortgage rate at 6.92%. In addition to elevated home prices and mortgage rates, potential buyers are also burdened by insurance costs, property taxes, homeowner association fees, and other expenses related to homeownership, all of which have been worsened by inflation.
This widespread lack of affordability has led to a notable decline in home sales across the country, marking the most significant decrease in eight months, as per Redfin’s analysis. Monthly home sales saw a slight decline of 0.5% in June, the largest drop since October 2023, with year-over-year sales down 1.1% and 21.5% lower than pre-pandemic figures.