Realtors are facing an unprecedented number of buyers backing out of agreements as individuals become more selective in a challenging real estate market.
According to a report from Redfin released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This figure marks the highest cancellation rate recorded for a June by the real estate site.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes the increase in cancellations to buyers being more discerning while navigating a pricey market. 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.”
Meanwhile, Rafael Corrales, a Redfin agent in Miami, described witnessing “nightmare scenarios” involving last-minute cancellations over trivial matters. In Miami alone, approximately 2,500 home purchases were canceled last month, equating to about 17.6% of contracts signed in June. Corrales pointed out that the primary concern remains affordability.
The median home sale price escalated to a record $442,525 in June, with the average 30-year mortgage rate hitting 6.92%. Besides the elevated home prices and persistent mortgage rates, potential buyers are also facing challenges from rising insurance costs, property taxes, HOA fees, and other expenses tied to homeownership, all intensified by inflation.
The widespread lack of affordability has led to the most significant decline in home sales nationwide in eight months, as per Redfin’s findings. On a monthly basis, home sales dropped 0.5% in June, marking the largest decline since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic figures.