Realtors are experiencing an increase in buyers backing out of home purchases, as prospective homeowners have become more selective in the current challenging real estate market.
A report from Redfin revealed that in June, approximately 56,000 home-purchase agreements were canceled, representing 15% of all homes that went under contract that month. This marks the highest percentage for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the trend of buyers reconsidering their decisions to the rising costs associated with home purchasing. “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 stated.
In Miami, another Redfin agent, Rafael Corrales, noted instances of clients pulling out of deals at the last minute over trivial matters. Last month, around 2,500 home purchases were canceled in Miami, representing about 17.6% of homes that went under contract in June. Corrales emphasized that the primary concern among buyers is affordability.
The median home sale price soared to a record $442,525 in June, while the average interest rate on a 30-year mortgage was reported at 6.92%. Along with soaring home prices and persistent high mortgage rates, buyers are also facing additional financial burdens from insurance, property taxes, homeowners association (HOA) fees, and other homeownership-related costs, all of which have been intensified by inflation.
This widespread unaffordability has led to a significant decline in home sales across the country, with Redfin observing the largest drop in eight months. Home sales fell 0.5% in June compared to the previous month—the steepest decline since October 2022. Year-over-year, home sales decreased by 1.1%, remaining 21.5% below pre-pandemic levels.