Realtors are facing an unprecedented number of buyers backing out of home purchases, as a more discerning clientele navigates a challenging real estate market.
According to a report from Redfin published on Tuesday, nearly 56,000 home purchase agreements were canceled in June, accounting for 15% of all homes that entered into contracts that month. This marks the highest percentage for June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the increase in buyers withdrawing from deals to a more selective approach in the face of an 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 stated.
Rafael Corrales, another Redfin agent based in Miami, has witnessed what he calls “nightmare scenarios,” including last-minute cancellations over trivial aspects. Approximately 2,500 home purchases were canceled in Miami in June, representing about 17.6% of homes that went under contract during that time. Corrales emphasized that the main concern remains affordability.
In June, the median home sale price reached a record high of $442,525, while the average rate for a 30-year mortgage was reported at 6.92%. In addition to rising home prices and persistent mortgage rates, prospective buyers are facing additional burdens from insurance, property taxes, HOA fees, and other costs associated with homeownership, all intensified by inflation.
This widespread lack of affordability has contributed to the most significant drop in home sales in eight months, as noted by Redfin. Home sales fell by 0.5% in June compared to the previous month, marking the largest decline since October 2023. Year-over-year, home sales experienced a 1.1% decrease and were 21.5% below levels seen before the pandemic.