Realtors are facing an unprecedented number of buyers backing out of home purchases, as consumer expectations become more stringent in the current challenging real estate environment.
A recent report from Redfin revealed that nearly 56,000 home-purchase agreements were canceled in June, equating to 15% of all homes that were under contract that month. This marks the highest percentage ever recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to increasingly selective buyers who are feeling the pressure of high costs in the market. “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,” Zubiate stated.
In Miami, another Redfin agent, Rafael Corrales, reported experiencing “nightmare scenarios,” including last-minute cancellations over insignificant details. Approximately 2,500 home purchases were called off in Miami last month, representing around 17.6% of homes that went under contract in June. Corrales emphasized that the primary issue stems from affordability challenges.
In June, the median home sale price reached an all-time high of $442,525, while the average interest rate for a 30-year mortgage was 6.92%. In addition to soaring home prices and elevated mortgage rates, potential buyers are also contending with rising insurance costs, property taxes, HOA fees, and all other expenses tied to homeownership, which have been aggravated by inflation.
This widespread lack of affordability in the housing market has led to the biggest decline in home sales in eight months, according to Redfin. Month over month, home sales decreased by 0.5% in June, marking the largest drop since October 2023. Year over year, sales fell by 1.1% and are now 21.5% lower than pre-pandemic figures.