Realtors are experiencing an increase in buyers backing out of home purchases as consumers become more selective amid challenging conditions in the real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, which accounts for 15% of all contracts that month, marking the highest rate recorded in June by the company.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes the rise in contract cancellations to buyers being more discerning, particularly because of the elevated costs associated with buying a home today. “They’re backing out due to minor issues because the monthly costs of purchasing a home are too high to overlook any unmet criteria,” Zubiate stated.
Miami-based Redfin agent Rafael Corrales reported witnessing “nightmare scenarios,” with buyers canceling deals at the last minute over trivial concerns. In June alone, approximately 2,500 home purchases were called off in Miami, representing about 17.6% of homes that went under contract. Corrales emphasized that the primary concern for buyers remains affordability.
The median home sale price hit a record $442,525 in June, coupled with a 30-year mortgage rate averaging 6.92%. Alongside the high home prices and mortgage rates, potential buyers are also facing burdensome costs from insurance, property taxes, HOA fees, and other homeownership expenses that have risen due to inflation.
This nationwide lack of affordability has led to a significant drop in home sales, the most considerable decline in eight months, according to Redfin. Home sales dipped by 0.5% month-over-month in June, the largest decrease since October 2023. On a year-over-year basis, home sales fell by 1.1% and were down 21.5% compared to pre-pandemic levels.