Realtors are encountering an unprecedented number of buyers backing out of home purchases, as customers become increasingly selective in a challenging real estate environment.
According to a report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that were under contract that month. This marks the highest cancellation rate recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes this rise in cancellations to buyers who are becoming more discerning in light of increasing market 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, fellow Redfin agent Rafael Corrales noted instances of “nightmare scenarios,” where last-minute withdrawals occurred over trivial details. Approximately 2,500 home purchases were called off last month in Miami, amounting to about 17.6% of homes that went under contract. Corrales pointed out that the primary concern remains affordability.
The median sale price of homes reached a record $442,525 in June, while the average interest rate for a 30-year mortgage was reported at 6.92%. Aside from the elevated home prices and persistent mortgage rates, prospective buyers are facing additional financial burdens from insurance costs, property taxes, HOA fees, and other expenses related to homeownership that inflation has worsened.
This widespread lack of affordability has led to a significant drop in home sales nationwide, with Redfin reporting the largest decline in eight months. Monthly home sales decreased by 0.5% in June, marking the most substantial drop since October 2022. Year-over-year, home sales fell by 1.1% and were 21.5% below levels prior to the pandemic.