Realtors are facing an increase in buyers backing out of home purchases as more potential homeowners become selective amid challenging market conditions. A recent report from Redfin indicates that nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes under contract that month. This marks the highest cancellation rate recorded for June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers wanting to secure every item on their must-have list, especially as the costs of homeownership escalate. “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,” she stated.
In Miami, agent Rafael Corrales reported experiencing “nightmare scenarios” where buyers canceled deals over trivial matters. Approximately 2,500 home purchases were rescinded in Miami last month, constituting about 17.6% of homes under contract during June. The primary concern, according to Corrales, is affordability.
The median home sale price reached a record high of $442,525 in June, accompanied by an average 30-year mortgage rate of 6.92%. In addition to the elevated prices and mortgage rates, potential buyers are also confronted with rising costs related to insurance, property taxes, and homeowner association fees, all intensified by inflation.
Nationwide affordability challenges have led to a significant decline in home sales, with Redfin reporting the largest decrease in eight months. Home sales fell by 0.5% in June compared to the previous month, marking the steepest drop since October. Year-over-year, home sales declined by 1.1%, with numbers down 21.5% from pre-pandemic levels.