Realtors are experiencing a surge in buyers backing out of home purchases, as many become more selective amid a challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that were under contract that month. This marks the highest percentage of canceled deals recorded for June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the increase in cancellations to buyers being more discerning, particularly 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 rationalize not getting everything on their must-have list.”
Rafael Corrales, another Redfin agent based in Miami, has witnessed troubling patterns, including last-minute deal cancellations over trivial concerns. In Miami, around 2,500 home purchases were aborted last month, equating to approximately 17.6% of homes that went under contract in June. Corrales emphasized that the primary challenge remains affordability.
The median home sale price hit an all-time high of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. Coupled with the elevated home prices, buyers are also facing added burdens from insurance, property taxes, HOA fees, and other ownership-related costs, which have been intensified by inflation.
The escalating affordability crisis is contributing to a significant decline in home sales nationwide, with Redfin reporting the largest monthly drop in eight months. Home sales decreased by 0.5% in June compared to the previous month, marking the most considerable decline since October 2023. Year-over-year, home sales fell by 1.1%, reflecting a staggering 21.5% drop compared to pre-pandemic levels.