Realtors are encountering a significant increase in buyers backing out of home purchases, as potential buyers become more selective in a challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements fell through in June, amounting to 15% of all homes that went under contract that month. This marks the highest cancellation rate for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributes this growing hesitance to buyers’ heightened standards amid rising costs. “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,” Zubiate explained.
In Miami, Redfin agent Rafael Corrales noted the prevalence of “nightmare scenarios,” including last-minute withdrawals over trivial details. Approximately 2,500 home purchases were cancelled in Miami during June, making up about 17.6% of contracts. Corrales emphasized that the primary concern is affordability.
The median home sale price reached a record $442,525 in June, while the average rate for a 30-year mortgage was 6.92%. In addition to these elevated home prices and persistently high mortgage rates, buyers are confronted with various other costs associated with home ownership, such as insurance, property taxes, and homeowner association fees, all of which have been intensified by inflation.
This lack of affordability has led to the most significant drop in home sales in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, marking the largest decline since October 2023. Year-over-year, home sales also fell by 1.1% and were 21.5% lower than pre-pandemic levels.