Realtors are facing an unprecedented number of buyers backing out of home purchases, with many becoming increasingly selective in a challenging real estate environment.
Almost 56,000 home-purchase agreements fell through in June, which represents 15% of all homes that went under contract during that month, according to a report from Redfin released on Tuesday. This marks the highest cancellation rate for June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are becoming choosier due to the high costs associated with home buying. “They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to justify not getting everything on their must-have list,” Zubiate explained.
Rafael Corrales, a Redfin agent in Miami, reported experiencing “nightmare scenarios,” including last-minute cancellations over trivial matters. In Miami, around 2,500 home transactions were canceled last month, accounting for about 17.6% of homes that went under contract in June. Corrales noted that the primary concern for buyers is affordability.
The median home sale price hit a record high of $442,525 in June, with the average 30-year mortgage rate at 6.92%. In addition to the high home prices and elevated mortgage rates, prospective buyers are struggling with additional costs such as insurance, property taxes, and HOA fees, which have been further impacted by inflation.
The ongoing affordability crisis has significantly affected home sales across the country, leading to their largest decline in eight months, according to Redfin. Monthly home sales dipped by 0.5% in June, marking the steepest drop since October 2023. Year-over-year, home sales fell by 1.1% and were down 21.5% compared to levels before the pandemic.