Realtors are witnessing a surge in buyers withdrawing from home purchases as individuals become more discerning in a challenging real estate environment.
A Redfin report revealed that nearly 56,000 home-purchase agreements fell through in June, representing 15% of all homes that went under contract during that month. This marks the highest percentage of canceled agreements recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes the trend to buyers being more selective, particularly in light of rising 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,” Zubiate explained.
Rafael Corrales, a Redfin agent in Miami, noted instances of “nightmare scenarios,” with numerous last-minute cancellations triggered by trivial matters. Last month, around 2,500 home purchases were canceled in Miami, amounting to approximately 17.6% of homes that went under contract in June. However, Corrales pointed out that the principal challenge remains affordability.
The median home sale price reached a record high of $442,525 in June, with the average 30-year mortgage rate hitting 6.92%. Besides the elevated property prices and persistently high mortgage rates, potential buyers are also burdened with increased costs related to insurance, property taxes, HOA fees, and other expenses that have been heightened by inflation.
The ongoing affordability crisis across the country has led to a significant drop in home sales, with Redfin reporting the largest decline in eight months. Home sales fell by 0.5% month-over-month in June, marking the steepest drop since October 2023. Year-over-year, home sales decreased by 1.1%, remaining 21.5% below pre-pandemic levels.