Realtors are encountering a significant increase in buyers backing out of home purchases as the real estate market becomes more challenging. In June, nearly 56,000 home-purchase agreements were canceled, accounting for 15% of all homes that were under contract during that month, marking the highest percentage recorded for June by Redfin.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the surge in cancellations to buyers who are being more selective in their choices, making them hesitant due to the high costs associated with home buying. She noted that buyers are backing out over minor issues, as they feel the financial commitment necessary doesn’t justify settling for anything less than their must-have list.
In Miami, agent Rafael Corrales observed similarly alarming trends, with approximately 2,500 home purchases canceled last month, representing about 17.6% of homes under contract. He highlighted that the main concern for buyers is affordability.
The median home sale price hit a record $442,525 in June, while the average rate on a 30-year mortgage was 6.92%. Coupled with rising home prices and high mortgage rates, prospective buyers are also facing additional burdens from insurance, property taxes, homeowners association fees, and other ownership costs, all intensified by inflation.
This nationwide decline in affordability has led to the most significant drop in home sales in eight months, as reported by Redfin. Home sales decreased by 0.5% month-over-month in June, marking the biggest decline since October 2023. Year-over-year, home sales were down by 1.1% and 21.5% lower than pre-pandemic levels.