Realtors are encountering a significant rise in buyers who are backing out of home purchases, as individuals become more selective in a challenging real estate environment.
According to a report by Redfin released on Tuesday, nearly 56,000 home-purchase agreements fell through in June, accounting for 15% of all homes that went under contract during that month. This marks the highest cancellation rate recorded by Redfin for any June.
Julie Zubiate, a real estate agent with Redfin Premier in the San Francisco Bay Area, attributes this trend to buyers being more discerning in light of escalating prices in the market. She noted, “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.”
Rafael Corrales, another Redfin agent based in Miami, described “nightmare scenarios” stemming from last-minute cancellations over trivial details. Approximately 2,500 home purchases were called off in Miami last month, representing about 17.6% of homes under contract in June. Corrales emphasized that the primary concern remains affordability.
The median home sale price reached a peak of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. In addition to high home prices and elevated mortgage rates, prospective buyers are increasingly burdened by insurance, property taxes, homeowner association fees, and other costs associated with homeownership, all of which have been intensified by inflation.
The nationwide lack of affordability has led to a notable decline in home sales, marking the largest drop in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, the largest reduction since October 2023. Furthermore, compared to the previous year, home sales fell by 1.1% and were down 21.5% from pre-pandemic levels.