Realtors are encountering an unprecedented number of buyers backing out of home purchases, as individuals become increasingly selective in a challenging real estate market.
According to a recent Redfin report, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest cancellation rate recorded for any June by the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers being more discerning amidst high costs associated with buying a home. She noted that buyers are withdrawing from deals over minor issues, as the monthly expenses related to homeownership have reached levels that make it difficult for them to justify settling for anything less than their ideal requirements.
In Miami, Redfin agent Rafael Corrales mentioned troubling scenarios that have unfolded, including last-minute cancellations over small details. In June alone, approximately 2,500 home purchases were canceled in Miami, which accounts for about 17.6% of homes under contract. Corrales pointed out that the primary concern for many buyers is affordability.
The median home sale price hit a record high of $442,525 in June, while the average 30-year mortgage rate stood at 6.92%. In addition to these high prices and mortgage rates, potential home buyers face additional burdens from insurance, property taxes, homeowners’ association fees, and other costs of homeownership that have been worsened by inflation.
This declining affordability nationwide has significantly impacted home sales, marking the largest drop in eight months as per Redfin’s findings. Compared to the previous month, home sales decreased by 0.5% in June, the steepest decline since October 2023. On a yearly basis, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.