Realtors are experiencing an increase in buyers backing out of home purchases, reflecting the shift towards more selective buyers in a challenging real estate market.
According to a report from Redfin released Tuesday, nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract that month. This marks the highest cancellation rate recorded for any June by the real estate platform.
Julie Zubiate, a real estate agent with Redfin Premier in the San Francisco Bay Area, attributes the rise in cancellations to buyers being more particular due to the higher 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,” Zubiate noted.
Rafael Corrales, a Redfin agent in Miami, also observed significant cancellations, describing experiences of “nightmare scenarios” where buyers pull out due to small details. In June, around 2,500 home purchases were canceled in Miami, representing about 17.6% of homes that went under contract. Corrales highlighted that the main concern remains affordability.
The median home sale price reached an unprecedented $442,525 in June, while the average interest rate for a 30-year mortgage was recorded at 6.92%. Alongside high home prices and elevated mortgage rates, potential buyers are facing additional financial burdens from insurance, property taxes, and homeowners association fees, all of which have been amplified by inflation.
This pervasive lack of affordability is causing a marked decline in home sales across the nation. Redfin reported that home sales fell by 0.5% in June, marking the largest monthly drop since October 2022. Compared to the previous year, home sales also decreased by 1.1% and were down 21.5% from pre-pandemic levels.