Realtors are experiencing an unprecedented number of buyers backing out of home purchases, as prospective homeowners become more selective in a challenging real estate environment.
In June, nearly 56,000 home-purchase agreements were canceled, representing 15% of all homes that went under contract that month, according to a Redfin report released on Tuesday. This marks the highest cancellation rate for June recorded by the real estate firm.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers being more discerning amid a costly market. “They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to justify not getting everything on their must-have list,” Zubiate remarked.
Rafael Corrales, a Redfin agent in Miami, noted that he has witnessed “nightmare scenarios” unfold, including last-minute contract terminations over trivial matters. Approximately 2,500 home purchases were canceled in Miami during June, accounting for about 17.6% of homes that went under contract. Corrales stressed that the primary concern for buyers remains affordability.
The median home sale price hit a record high of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. In addition to the rising home prices and elevated mortgage rates, buyers are also facing challenges from insurance, property taxes, homeowners association fees, and other expenses associated with homeownership, all worsened by inflation.
The nationwide affordability crisis has led to a significant decline in home sales, marking the largest drop in eight months, as reported by Redfin. Monthly home sales decreased by 0.5% in June, the steepest fall since October 2023. Year-over-year, home sales fell by 1.1% and were down 21.5% from pre-pandemic levels.