Realtors are experiencing an unprecedented number of buyers backing out of home purchases as consumers become more discerning in a challenging real estate market.
According to a report released by Redfin, almost 56,000 home-purchase agreements were canceled in June, equating to 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 agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are becoming more selective as they navigate an 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 rationalize not getting everything on their must-have list,” she explained.
In Miami, Redfin agent Rafael Corrales shared that he has witnessed troubling situations, including last-minute cancellations over trivial matters. Last month, approximately 2,500 home purchases were called off in Miami, which represents around 17.6% of homes under contract in June. Corrales identified affordability as the primary concern for buyers.
The median home sale price hit a record high of $442,525 in June, with the average interest rate for a 30-year mortgage at 6.92%. The high cost of homes, in conjunction with elevated mortgage rates, is compounded by additional expenses such as insurance, property taxes, and homeowners’ association fees, all of which have been intensified by inflation.
This lack of affordability has led to a significant downturn in home sales, the largest decline in eight months, according to Redfin. On a monthly basis, home sales decreased by 0.5% in June, marking the most notable drop since October 2023. Compared to the previous year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.