Realtors are experiencing an unprecedented surge in buyers backing out of home purchases, as potential homeowners become increasingly selective in a challenging real estate market.
In June, nearly 56,000 home-purchase agreements were canceled, representing 15% of all homes that went under contract that month, according to a recent report from Redfin. This marks the highest percentage of cancellations recorded for June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the increase in buyers retracting their offers to a more discerning clientele facing higher prices in the market. She noted that buyers are opting out for minor reasons because the financial burdens of purchasing a home have become too steep to justify settling for less than their ideal specifications.
Rafael Corrales, a Redfin agent in Miami, shared his observations of distressing situations arising from last-minute cancellations due to minor details. Approximately 2,500 home transactions were canceled in Miami last month, accounting for about 17.6% of homes under contract. He emphasized that the primary challenge is the issue of affordability.
The median home sale price reached a historic high of $442,525 in June, while the average rate on a 30-year mortgage stood at 6.92%. In addition to the elevated home prices and high mortgage rates, prospective buyers are also grappling with increased expenses from insurance, property taxes, homeowners’ association fees, and other costs tied to homeownership, all further exacerbated by inflation.
This affordability crisis has led to a significant drop in home sales nationwide, with Redfin reporting the largest decline in eight months. On a monthly basis, home sales fell by 0.5% in June, the steepest drop since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic figures.