Realtors are experiencing an unprecedented number of buyers backing out of home purchases as consumers become more selective in a challenging real estate environment.
In June, nearly 56,000 home-purchase agreements were canceled, representing 15% of all homes that entered contract during the month, according to a report from Redfin released on Tuesday. This marks the highest cancellation rate recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent operating in the San Francisco Bay Area, attributes the increase in buyer hesitations to a more discerning clientele facing a costly housing market. She noted that many buyers are withdrawing from deals over minor issues because the current monthly expenses associated with purchasing a home are substantial enough to warrant only the most essential features on their wish lists.
Rafael Corrales, another Redfin agent based in Miami, reported witnessing “nightmare scenarios” unfold, with buyers canceling at the last minute due to trivial concerns. He noted that around 2,500 home purchases were called off in Miami last month, equating to approximately 17.6% of homes that went under contract in June. He emphasized that the primary challenge is affordability.
The median home sale price hit a record $442,525 in June, while the average rate for a 30-year mortgage stood at 6.92%. Buyers are also facing additional financial burdens from insurance, property taxes, homeowners association (HOA) fees, and other ownership costs, all of which have been impacted by inflation.
This ongoing affordability crisis is contributing to a significant decline in home sales nationwide, marking the largest monthly drop in eight months, as reported by Redfin. Home sales fell by 0.5% in June compared to the previous month, which is the steepest decline since October 2023. Year-over-year, home sales decreased by 1.1%, remaining 21.5% below pre-pandemic levels.