Realtors are experiencing an unprecedented number of buyers backing out of home purchases, primarily due to increased selectivity in a challenging real estate market.
A report from Redfin revealed that 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 cancellation rate for June in the site’s history.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributed this trend to more discerning buyers facing a pricier 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 rationalize not getting everything on their must-have list.”
Rafael Corrales, another Redfin agent in Miami, reported witnessing “nightmare scenarios” with last-minute cancellations over trivial matters. Last month, about 2,500 home purchases were canceled in Miami, representing roughly 17.6% of homes that went under contract in June. Corrales emphasized that the primary concern for buyers is affordability.
The median home sale price reached a record high of $442,525 in June, while the average rate for a 30-year mortgage stood at 6.92%. Along with elevated home prices and mortgage rates, potential buyers are also contending with increased costs associated with insurance, property taxes, homeowners association (HOA) fees, and other expenses, all intensified by inflation.
The widespread lack of affordability has led to the most significant decline in home sales in eight months. Redfin reported a 0.5% drop in monthly home sales for June, marking the largest decrease since October. Year-over-year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.