Realtors are witnessing an unprecedented number of buyers backing out of home purchases, as consumers grow increasingly discerning in a challenging real estate environment.
According to a report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract that month. This marks the highest rate of rejections for June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier agent based in the San Francisco Bay Area, attributes the increase in buyer hesitations to growing selectivity, particularly in light of escalating market costs. She noted, “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.”
In Miami, fellow Redfin agent Rafael Corrales reported experiencing “nightmare scenarios” with buyers canceling deals at the last moment over minor details. Approximately 2,500 home purchases were canceled in the Miami area last month, translating to 17.6% of homes that were under contract in June. Corrales highlighted affordability as the central issue affecting buyers.
June saw the median home sale price reach a record $442,525, with the average rate for a 30-year mortgage landing at 6.92%. In addition to the high home prices and elevated mortgage rates, potential buyers are also burdened by rising insurance, property taxes, homeowners’ association fees, and other costs related to homeownership, all intensified by inflation.
Consequently, the nationwide lack of affordability has contributed to a significant decline in home sales, with Redfin reporting the largest decrease in eight months. Monthly sales dipped by 0.5% in June, marking the steepest drop since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% below levels seen before the pandemic.