Realtors are facing an unprecedented number of buyers backing out of home purchases as individuals become more selective in a challenging real estate environment.
In June, nearly 56,000 purchase agreements were canceled, accounting for 15% of all homes that went under contract during that month, according to a report from Redfin. This marks the highest percentage of cancellations recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed the increase in cancellations to buyers’ concerns over high costs in the current market. “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 commented.
Rafael Corrales, another Redfin agent from Miami, reported witnessing “nightmare scenarios,” where buyers cancel deals at the last minute over trivial matters. Last month, around 2,500 home purchases were canceled in Miami, representing approximately 17.6% of homes under contract in June. Corrales emphasized that the core issue remains affordability.
The median home sale price in June hit a record high of $442,525, while the average interest rate on a 30-year mortgage stood at 6.92%. Additionally, prospective buyers are burdened by rising insurance costs, property taxes, homeowners association fees, and other expenses related to homeownership, all intensified by inflation.
The ongoing affordability challenges have led to a significant decline in home sales nationwide, with Redfin indicating the largest decrease in eight months. Monthly sales fell by 0.5% in June, marking the steepest drop since October 2023. Year-over-year, home sales declined by 1.1% and currently sit 21.5% below levels seen before the pandemic.