Realtors are facing a significant increase in buyers withdrawing from home purchases as individuals become more selective in the challenging real estate market.
A report from Redfin revealed that nearly 56,000 home-purchase agreements were canceled in June, which translates to 15% of all homes that went under contract that month. This figure represents the highest rate recorded for any June.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes the uptick in cancellations to more discerning buyers contending with high market costs. “They are backing out due to minor issues because the monthly expenses linked to buying a home today are simply too steep to overlook any deficiencies in their must-have lists,” Zubiate stated.
Rafael Corrales, another agent with Redfin in Miami, described encountering severe situations, including last-minute cancellations over trivial details. Approximately 2,500 home purchases were aborted in Miami last month, equating to about 17.6% of homes that went under contract in June. Corrales indicated that affordability remains the primary concern.
In June, the median home sale price hit an all-time high of $442,525, while the average 30-year mortgage rate climbed to 6.92%. Along with elevated home prices and still-high mortgage rates, potential buyers are also facing additional burdens such as insurance, property taxes, HOA fees, and other costs tied to homeownership, all worsened by inflation.
This widespread challenge regarding affordability has led to the sharpest decline in home sales nationwide in eight months, according to Redfin. Home sales dropped by 0.5% from the previous month in June—the largest decrease since October 2023. Year-over-year, home sales fell by 1.1%, and they are currently 21.5% below levels seen before the pandemic.