Realtors are witnessing an unprecedented number of buyers backing out of home purchases, as prospective homeowners become more selective in the challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements fell through in June, accounting for 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, attributes this trend to buyers being more discerning due to rising costs. “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.
In Miami, Redfin agent Rafael Corrales reported experiencing “nightmare scenarios” of last-minute cancellations over trivial matters. Approximately 2,500 home deals were canceled in Miami last month, which represents about 17.6% of homes that went under contract in June. Corrales emphasized that the primary concern is affordability.
The median home sale price hit a record $442,525 in June, while the average interest rate for a 30-year mortgage rose to 6.92%. Alongside the hefty home prices and high mortgage rates, potential buyers are also burdened by additional expenses, including insurance, property taxes, HOA fees, and other costs associated with homeownership, all of which have been intensified by inflation.
The nationwide lack of affordability has led to a significant decline in home sales, marking the most considerable drop in eight months, according to Redfin. On a monthly basis, home sales fell by 0.5% in June, the largest decline since October 2023. Year-over-year, home sales decreased by 1.1% and are currently 21.5% below pre-pandemic levels.