Realtors are encountering an increasing number of buyers who are backing out of home purchases, as individuals become more selective in a challenging real estate market.
In June, nearly 56,000 agreements for home purchases were abandoned, representing 15% of all homes that went under contract that month, according to a report from Redfin released on Tuesday. This marks the highest percentage for any June noted by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, cited the more discerning nature of buyers who are facing a pricier market as a reason for the increase in cancellations.
“Buyers are withdrawing due to minor issues because the monthly costs associated with purchasing a home today are just too high to justify not getting everything on their wish list,” Zubiate remarked.
Rafael Corrales, another Redfin agent from Miami, reported experiencing “nightmare scenarios,” including last-minute cancellations related to small details. In June, approximately 2,500 home purchases were canceled in Miami, which accounts for about 17.6% of homes under contract that month. Corrales highlighted that the primary concern is affordability.
In June, the median home sale price rose to a record $442,525, while the average interest rate for a 30-year mortgage stood at 6.92%. In addition to the elevated home prices and high mortgage rates, potential home buyers are also facing burdens from insurance, property taxes, HOA fees, and other homeownership costs that have been intensified by inflation.
The nationwide decline in affordability has led to a significant drop in home sales, marking the steepest decline in eight months, as reported by Redfin. Home sales fell by 0.5% on a monthly basis in June, indicating the largest drop since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than levels seen before the pandemic.