Realtors are encountering an unprecedented number of buyers dropping out of home purchases as individuals become more selective in the challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements fell through in June, representing 15% of all homes that went under contract during that month. This marks the highest percentage recorded for a June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the increase in cancellations to a more discerning buyer demographic struggling with a costly market.
“They are 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 noted.
Another Redfin agent, Rafael Corrales from Miami, described witnessing “nightmare scenarios,” including last-minute cancellations over trivial details. In Miami, approximately 2,500 home purchases were canceled last month, which accounts for about 17.6% of homes that entered into contract in June. However, Corrales emphasized that the main concern is affordability.
The median sale price of homes reached a record $442,525 in June, while the average rate for a 30-year mortgage stood at 6.92%. With the high home prices combined with elevated mortgage rates, prospective buyers are further burdened by insurance costs, property taxes, HOA fees, and other expenses related to homeownership that have been intensified by inflation.
This nationwide lack of affordability has led to significant declines in home sales, marking the largest decrease in eight months, as reported by Redfin. Month-over-month, home sales fell by 0.5% in June, the steepest drop since October 2023. Year-over-year figures also reflected a decline of 1.1%, with sales 21.5% below pre-pandemic levels.