Realtors are experiencing an increase in buyers walking away from home purchases as consumers become more discerning in a challenging real estate market.
A report from Redfin revealed that nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that were under contract that month. This figure marks the highest percentage for any June documented by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in cancellations to a more selective buyer base that is facing a particularly expensive 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 explained.
Miami-based Redfin agent Rafael Corrales reported experiencing “nightmare scenarios” where buyers canceled agreements at the last moment over trivial details. Approximately 2,500 home purchases were abandoned in Miami last month, which accounts for about 17.6% of homes that were under contract in June. Corrales noted that the primary concern remains affordability.
In June, the median home sale price reached an all-time high of $442,525, while the average interest rate on a 30-year mortgage stood at 6.92%. Coupled with elevated home prices and persistent mortgage rates, potential buyers are also facing additional burdens from insurance, property taxes, homeowners association (HOA) fees, and other expenses related to ownership, all intensified by inflation.
The widespread lack of affordability in the market has contributed to the most significant decline in home sales in eight months, as reported by Redfin. Monthly home sales fell by 0.5% in June, marking the steepest decrease since October 2023. Year-over-year, home sales dropped by 1.1% and were 21.5% lower than pre-pandemic figures.