Real estate agents are encountering an increasing number of buyers who back out of home purchases, as potential buyers become more discerning in a challenging market.
According to a report by Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest percentage recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the surge in cancellations to buyers who are selecting homes more carefully due to heightened costs.
“They are withdrawing due to minor issues because the monthly expenses related to purchasing a home today are too significant to overlook without meeting all their requirements,” Zubiate explained.
Rafael Corrales, another Redfin agent based in Miami, described some challenging situations involving last-minute cancellations over trivial details. In Miami alone, around 2,500 home purchases were canceled in June, amounting to approximately 17.6% of homes that went under contract. Corrales emphasized that the overarching concern remains affordability.
The median sale price for homes reached a record high of $442,525 in June, while the average interest rate on a 30-year mortgage was 6.92%. Along with the elevated prices for homes and persistent high mortgage rates, prospective buyers are also facing additional costs such as insurance, property taxes, homeowners association fees, and other expenses related to homeownership, all intensified by inflation.
This affordability crisis nationwide has led to the largest decline in home sales in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, marking the most significant drop since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.