Realtors are facing an increasing number of buyers backing out of home purchases, as prospective homeowners become more discerning in a challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements collapsed in June, accounting for 15% of all homes that went under contract during the month. This marks the highest rate for any June on record.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers being more selective, influenced by the high costs associated with purchasing a home. “They are opting out due to minor issues because the monthly expenses linked to buying a home today are simply too steep to warrant sacrificing items on their must-have list,” Zubiate explained.
In Miami, fellow Redfin agent Rafael Corrales reported experiencing “nightmare scenarios” where small details led to last-minute cancellations. Approximately 2,500 home purchases were canceled in Miami last month, representing about 17.6% of homes that went under contract in June. Corrales noted that affordability remains the primary concern.
The median home sale price hit a record high of $442,525 in June, alongside an average 30-year mortgage rate of 6.92%. In addition to the elevated home prices and persistent mortgage rates, potential buyers are also facing burdens from property insurance, taxes, homeowners association fees, and other costs tied to homeownership, all worsened by inflation.
This lack of affordability has contributed to the most significant drop in home sales in eight months, as reported by Redfin. Month-over-month, home sales dipped by 0.5% in June, marking the largest decline since October 2022. Year-over-year, home sales fell by 1.1% and were 21.5% below pre-pandemic levels.