Realtors are experiencing an unprecedented rise in buyers backing out of home purchases, attributed to an increasingly selective buyer base amid challenging real estate conditions.
According to a recent Redfin report, nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes under contract that month. This marks the highest cancellation rate recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, noted that buyers are hesitant due to the rising costs associated with homeownership. “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.
Similarly, Rafael Corrales, a Redfin agent in Miami, has witnessed troubling trends, including last-minute cancelations over minor details. In Miami alone, approximately 2,500 home purchases were aborted last month, representing around 17.6% of homes under contract in June. Corrales emphasized that affordability remains the primary concern.
In June, the median home sale price soared to a record $442,525, while the average rate for a 30-year mortgage was set at 6.92%. Alongside the elevated home prices and high mortgage rates, potential home buyers are further burdened by insurance, property taxes, HOA fees, and other homeownership costs, which have been exacerbated by inflation.
The widespread unaffordability within the market has resulted in a significant drop in home sales, marking the most substantial decline in eight months, according to Redfin. Month-over-month, home sales fell by 0.5% in June—the largest decrease since October 2022. Year-over-year, home sales decreased by 1.1%, landing 21.5% below pre-pandemic figures.