Realtors are witnessing an unprecedented number of buyers backing out of home purchases as the real estate market becomes increasingly challenging.
According to a Redfin report released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that entered into contracts that month. This marks the highest cancellation rate for June ever recorded by the platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes this trend to buyers adopting a more selective approach amid rising costs in the market. “They are withdrawing due to minor issues because the monthly expenses tied to home ownership today are too high to justify settling for less than their must-have list,” Zubiate stated.
In Miami, Redfin agent Rafael Corrales noted that he has encountered “nightmare scenarios,” with numerous last-minute drops due to minor details. In June alone, around 2,500 home purchases were cancelled in Miami, accounting for about 17.6% of homes that were under contract. Corrales emphasized that the primary concern for buyers remains affordability.
The median home sale price reached an all-time high of $442,525 in June, while the average 30-year mortgage rate stood at 6.92%. Alongside the elevated home prices and high mortgage rates, potential buyers are also facing additional burdens such as insurance, property taxes, homeowners association fees, and other costs associated with homeownership, all of which have been intensified by inflation.
This widespread lack of affordability has resulted in the steepest decline in home sales nationwide in eight months, according to Redfin. Monthly home sales experienced a decline of 0.5% in June, the largest decrease since October, while year-over-year sales fell by 1.1%, sitting 21.5% below pre-pandemic levels.