Realtors are experiencing an unprecedented number of buyers backing out of home purchases as individuals become more selective in a challenging real estate market.
In June, nearly 56,000 home purchase agreements were canceled, representing 15% of all homes that were under contract that month. This marks the highest percentage recorded for June, according to a report by Redfin.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to more discerning buyers who are facing higher costs in the market. She noted that buyers are withdrawing from deals due to minor issues, as the cost of homeownership has become increasingly difficult to justify without securing all features on their wish lists.
Rafael Corrales, another Redfin agent from Miami, reported witnessing “nightmare scenarios” where last-minute cancellations occurred over trivial details. In Miami alone, approximately 2,500 home purchases were canceled in June, translating to about 17.6% of homes that went under contract. Corrales pointed out that the primary concern is affordability.
The median home sale price hit a record $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. In addition to the high costs of homes, prospective buyers are also faced with expenses related to insurance, property taxes, and homeowner association fees, all of which have been heightened by inflation.
The nationwide lack of affordability has contributed to a significant decline in home sales, marking the largest decrease in eight months. According to Redfin, home sales fell by 0.5% in June compared to the previous month, the steepest drop since October 2023. Year-over-year, home sales decreased by 1.1%, and they are currently 21.5% below pre-pandemic levels.