Realtors are facing an unprecedented number of buyers backing out of home purchases as individuals become more selective in a challenging real estate environment.
According to a report from Redfin released on Tuesday, nearly 56,000 home purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest percentage of cancellations for any June since records began.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers hesitating over minor concerns, as the current monthly costs of purchasing a home have made them more discerning about their requirements. “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 stated.
Rafael Corrales, a Redfin agent based in Miami, described some “nightmare scenarios” involving last-minute cancellations over trivial details. In Miami, approximately 2,500 home purchases were called off last month, equating to about 17.6% of homes that had been under contract in June. However, he emphasized that the primary concern among buyers remains affordability.
The median home sale price reached a record high of $442,525 in June, with the average interest rate for a 30-year mortgage at 6.92%. In addition to elevated home prices and mortgage rates, prospective buyers are currently facing escalating costs related to insurance, property taxes, HOA fees, and other expenses tied to homeownership, all worsening due to inflation.
The national lack of affordability is contributing to a significant decline in home sales, with Redfin reporting the biggest drop in eight months. Monthly home sales decreased by 0.5% in June, marking the largest decline since October 2022. Year-over-year, home sales fell by 1.1% and were 21.5% below levels seen before the pandemic.