Realtors are encountering an increasing number of buyers backing out of home purchases, with a growing trend of selectivity evident in a challenging real estate market.
In June, nearly 56,000 home-purchase agreements were terminated, amounting to 15% of all homes that went under contract that month, as reported by Redfin. This represents the highest percentage recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed this trend to a more discerning buyer due to rising market costs. She noted, “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.”
In Miami, Rafael Corrales, another Redfin agent, reported witnessing “nightmare scenarios,” including last-minute cancellations over trivial matters. Last month, around 2,500 home purchases were canceled in Miami, which constitutes approximately 17.6% of homes that went under contract in June. Corrales emphasized that the primary issue remains affordability.
The median home sale price hit a record high of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. In addition to elevated home prices, potential buyers are also burdened by rising insurance costs, property taxes, HOA fees, and other homeownership expenses, all further impacted by inflation.
This overarching affordability crisis has contributed to a notable decline in home sales nationwide, marking the largest drop in eight months, as per Redfin. Month-over-month, home sales fell by 0.5% in June, the steepest decrease since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic figures.