Realtors are facing an increasing number of buyers backing out of home purchases as individuals become more selective in the current challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements were terminated in June, accounting for 15% of all homes that went under contract that month. This 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 discerning due to the heightened costs associated with home ownership. “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.
Rafael Corrales, a 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, representing about 17.6% of the homes that were under contract in June. Corrales emphasized that the primary concern is affordability.
The median home sale price reached a record high of $442,525 in June, while the average rate for a 30-year mortgage stood at 6.92%. Prospective home buyers are also facing challenges from increased insurance rates, property taxes, homeowners association fees, and other expenses linked to homeownership, all of which have been impacted by inflation.
This widespread lack of affordability has led to the most significant decline in home sales nationwide in the last eight months, as reported by Redfin. Home sales experienced a month-over-month decrease of 0.5% in June, marking the largest decline since October 2022. Year-over-year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.