Realtors are facing an increasing number of buyers backing out of home purchases, as potential homeowners become more selective in a challenging real estate market. In June alone, nearly 56,000 home-purchase agreements were terminated, representing 15% of all homes that were under contract that month, marking the highest percentage ever recorded for June, according to a report by Redfin.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers being overly cautious, particularly given the heightened costs associated with homeownership. “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 explained.
Rafael Corrales, another Redfin agent in Miami, reported seeing numerous last-minute cancellations over trivial matters. In Miami, approximately 2,500 home sales were canceled last month, reflecting about 17.6% of homes under contract in June. Corrales highlighted that the primary concern is affordability.
In June, the median home sale price surged to a record $442,525, while the average rate for a 30-year mortgage hit 6.92%. In addition to the high prices and elevated mortgage rates, prospective buyers are also facing increased expenses from insurance, property taxes, and HOA fees, all of which have been worsened by inflation.
The growing affordability crisis is leading to a notable decline in home sales nationwide, according to Redfin. Sales dropped by 0.5% in June compared to the previous month, marking the most significant decline since October 2023. On a year-over-year basis, home sales dropped by 1.1%, falling 21.5% below pre-pandemic levels.