Realtors are experiencing an increase in buyers backing out of deals, as individuals become choosier in a challenging real estate market.
Almost 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month, according to a Redfin report released Tuesday. This marks the highest percentage of any June on record for the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers being more selective in a more 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 justify not getting everything on their must-have list,” Zubiate explained.
Rafael Corrales, another Redfin agent in Miami, noted “nightmare scenarios” such as last-minute cancellations over small details. Approximately 2,500 home purchases were canceled in Miami last month, accounting for 17.6% of homes that went under contract in June. However, Corrales indicated that the primary problem is affordability.
The median home sale price hit a record $442,525 in June, with the average rate on a 30-year mortgage at 6.92%. In addition to high home prices and elevated mortgage rates, prospective buyers are facing insurance costs, property taxes, HOA fees, and other expenses associated with homeownership, all of which have been exacerbated by inflation.
Nationwide, the lack of affordability in the market has led to the biggest decline in home sales in eight months, according to Redfin. On a monthly basis, home sales dropped 0.5% in June—the largest decrease since October 2023. Year-over-year, home sales fell 1.1% and were 21.5% below pre-pandemic levels.