Realtors are experiencing an unprecedented number of buyers backing out of home purchases as consumers become more selective in a challenging real estate climate.
According to a report from Redfin, nearly 56,000 agreements for home purchases fell through in June, representing 15% of all homes that went under contract during that month. This marks the highest rate recorded for any June since the platform’s inception.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in canceled agreements to buyers being more discerning in a costly market. 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 ignore without meeting their essential requirements.”
Rafael Corrales, another agent with Redfin in Miami, reported experiencing distressing scenarios, including last-minute cancellations over trivial matters. In Miami alone, around 2,500 home purchases were canceled last month, equating to about 17.6% of homes that went under contract in June. Corrales identified affordability as the primary concern.
The median selling price of homes hit a record high of $442,525 in June, alongside a 30-year mortgage rate averaging 6.92%. In addition to escalating home prices and persistent high mortgage rates, potential buyers are also facing challenges from increased insurance costs, property taxes, homeowner association fees, and other expenses related to homeownership, all aggravated by inflation.
This widespread lack of affordability has led to the most significant drop in home sales in eight months. Redfin’s data revealed that home sales decreased by 0.5% in June compared to the previous month, marking the largest decline since October 2022. Year-over-year, home sales fell by 1.1% and remained 21.5% below levels seen before the pandemic.