Realtors are facing an unprecedented number of buyers backing out of home purchases, as prospective homeowners become more selective in a challenging real estate market.
According to a report from Redfin, around 56,000 purchase agreements fell through in June, representing 15% of all homes that were under contract during that month. This is the highest cancellation rate recorded for June since the company began tracking this data.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers being more discerning amid high market costs. “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 noted.
Rafael Corrales, a Redfin agent in Miami, reported witnessing “nightmare scenarios” of last-minute cancellations due to trivial details. Approximately 2,500 home purchases were canceled in Miami last month, amounting to about 17.6% of the homes that were under contract in June. Corrales emphasized that the primary concern remains affordability.
The median sale price of homes 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 the already steep home prices and high mortgage rates, buyers are also facing additional costs related to insurance, property taxes, and homeowners association fees, all of which have been amplified by inflation.
The nationwide lack of affordability has contributed to the largest decline in home sales in eight months, as reported by Redfin. Month-to-month, home sales saw a decrease of 0.5% in June, marking the steepest drop since October 2022. Year over year, sales fell by 1.1%, standing at 21.5% below pre-pandemic levels.