Realtors are encountering an increasing number of indecisive buyers as the real estate market becomes more challenging and selective.
A report from Redfin revealed that 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 for June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributed the surge in cancellations to buyers who are being more selective and are finding it difficult to reconcile the high monthly costs of homeownership with their wants and needs.
“Buyers are backing out over minor issues because the monthly expenses are high enough that they feel the need to ensure they get everything on their must-have list,” Zubiate explained.
Rafael Corrales, another Redfin agent based in Miami, noted that he has witnessed “nightmare scenarios” where buyers cancel at the last minute over small details. In Miami alone, about 2,500 home purchases were called off last month, representing around 17.6% of homes that were under contract. Corrales pointed out that the primary concern remains affordability.
In June, the median home sale price hit a record high of $442,525, and the average 30-year mortgage rate stood at 6.92%. In addition to soaring home prices and high mortgage rates, prospective buyers are facing significant costs related to insurance, property taxes, and homeowners association fees, all impacted by inflation.
This nationwide issue of affordability has led to a notable decline in home sales, the most significant drop in eight months, according to Redfin. Home sales slipped by 0.5% month-over-month in June, marking the largest decrease since October 2023. Compared to the same month last year, home sales experienced a 1.1% drop and were 21.5% lower than pre-pandemic levels.