Realtors are facing an increasing number of buyers who back out of home purchases as consumer preferences tighten in a challenging real estate environment.
In June, nearly 56,000 home-purchase agreements were canceled, accounting for 15% of all homes that entered into contracts that month, according to a report from Redfin released on Tuesday. This marks the highest cancellation rate for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the uptick in cancellations to buyers being more selective, particularly as they grapple with the high costs associated with home buying.
“Many are canceling deals over minor issues because the monthly expenses linked to purchasing a home today are so substantial that they can’t justify settling for anything less than their ideal requirements,” Zubiate remarked.
Rafael Corrales, a Redfin agent in Miami, has observed “nightmare scenarios” unfold, including last-minute deal collapses over trivial details. About 2,500 home purchases were revoked in Miami last month, representing approximately 17.6% of homes that were under contract in June. However, he highlighted that the primary issue remains affordability.
In June, the median home sale price hit a record $442,525, while the average 30-year mortgage rate reached 6.92%. In addition to the elevated home prices and high mortgage rates, potential buyers are also facing burdens from insurance, property taxes, HOA fees, and other homeownership-related costs, which have been worsened by inflation.
The overall lack of affordability in the real estate market has led to the largest decline in home sales in eight months, according to Redfin. Month-over-month, home sales decreased by 0.5% in June, marking the most significant drop since October 2022. Year over year, sales declined by 1.1% and were 21.5% below pre-pandemic levels.